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What changed in Voyager Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Voyager Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+705 added−679 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-07)

Top changes in Voyager Therapeutics, Inc.'s 2023 10-K

705 paragraphs added · 679 removed · 512 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

238 edited+101 added−97 removed152 unchanged
Biggest changeTrademark Protection We own trademark registrations in the United States for the marks VOYAGER THERAPEUTICS and VOYAGER THERAPEUTICS Logo for “pharmaceutical research and development in the field of gene therapy.” 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, “biological preparations for gene therapy,” “pharmaceutical research and development in the field of gene therapy,” and “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.
Biggest changeWe 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.
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 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.
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 Arising IP, is to be owned as follows: (a) we solely own all 2023 Arising IP created jointly by representatives of us and Neurocrine that constitutes capsid know-how and capsid patent rights, and 2023 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 Arising IP, (x) we solely own all such 2023 Arising IP created solely by its representatives, (y) Neurocrine solely owns all such 2023 Arising IP created solely by its representatives; and (z) the parties jointly own all such 2023 Arising IP created jointly by representatives of both Neurocrine and us. 2023 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.
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.
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 that FDA determines that an application does not satisfy this standard, it will issue a Refuse to File, or RTF, determination to the sponsor.
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.
With passage of the 21 st 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.
With the passage of the 21 st 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.
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 mid- to high-single-digit tiered 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 Novartis Agreement prior to the expiration of the applicable Novartis License Option.
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.
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.
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.
Additionally, we are obligated to pay low single-digit royalties to Touchlight on future payments we receive 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 of our therapeutic programs.
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.
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 a Pfizer License Option with respect to a capsid for the specified Pfizer Transgene for potential treatment of a rare neurological disease.
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.
Specifically, the studies must be conducted in accordance with GCP, 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.
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.
Biological Products Development Process In the United States, the FDA approves and regulates gene therapy 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.
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.
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 they are subject to periodic unannounced inspections by the FDA for compliance with cGMPs and other requirements.
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.
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 the 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.
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.
If a gene therapy 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 gene therapy 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.
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.
Neurocrine may terminate the 2023 Neurocrine Collaboration 23 Table of Contents 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 in its entirety or on a 2023 Neurocrine Program-by-2023 Neurocrine Program and/or country-by-country 21 Table of Contents 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.
Although the previous 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.
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.
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.
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.
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 Pfizer Agreement expires on the expiration of the last-to-expire royalty term with respect to all Pfizer Licensed CNS Products in all countries.
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.
Our ability to stop third parties from making, having made, using, selling, offering to sell or importing our products may depend on the extent to which we have rights under valid and enforceable licenses, patents or trade secrets that cover these activities. In some cases, these rights may need to be enforced by third-party licensors.
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.
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. ​ 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.
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. 25 Table of Contents ​ 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.
Competitors, however, may receive approval of a different gene 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.
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.
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. 31 Table of Contents U.S. Government Regulation U.S.
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. 34 Table of Contents U.S. Government Regulation ​ U.S.
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 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.
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.
In September 2021, the Court of Appeals for the 11 th 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.
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.
While one treatment for Friedreich’s ataxia has recently been approved by the FDA, 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.
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.
We also rely on trade secrets and know-how relating to our proprietary technology platform, on continuing technological innovation and on in-licensing opportunities to develop, improve and maintain the strength of our position in the field of gene therapy that may be important for the development of our business.
We 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 also intend to seek patent protection or rely upon trade secret rights to protect other technologies that may be used to discover and validate targets and that may be used to identify and develop novel biological products. We seek protection, in part, through confidentiality and proprietary information agreements.
We 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.
Despite these review goals, it is not uncommon for FDA review of an application to extend beyond the PDUFA target action date. 36 Table of Contents 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.
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 parties have agreed that the 2023 Co-Co Agreement will provide us the right to terminate the 21 Table of Contents 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.
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 19 Table of Contents terminate or amend the 2023 Co-Co Agreement upon a change of control under certain circumstances.
We agreed, upon our exercise of 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.
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.
Novartis may also terminate the Novartis 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 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.
The 2023 Collaboration Agreement provides for aggregate development 22 Table of Contents milestone payments from Neurocrine to us 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 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 20 Table of Contents million; and (b) each of the three 2023 Discovery Programs of up to $175.0 million for each 2023 Discovery Program.
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. 26 Table of Contents Manufacturing The manufacture of gene therapy products is technically complex, and necessitates substantial expertise and capital investment.
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.
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 applicable Novartis Research Terms, 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.
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.
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, Neurocrine and the Company also amended and restated their 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 shares of the Company owned by Neurocrine.
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.
ODD must be requested before submitting a BLA. After the FDA grants ODD, the identity of the therapeutic agent and its potential orphan use are 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 must be requested before 43 Table of Contents 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.
The remaining 2019 Transition Events are (a) with respect to the FA Program, our receipt of topline data for the initial Phase 1 clinical trial for an FA Program product candidate; and (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 remaining 2019 Transition Events are (a) with respect to the FA Program, our receipt of topline data for 23 Table of Contents 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.
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 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.
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 44 Table of Contents 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.
Approximately 40 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.
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.
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 Phase 4 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.
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.
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 relationship between pricing and manufacturer patient programs, and reduce the costs of pharmaceuticals under Medicare and Medicaid.
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 46 Table of Contents relationship between pricing and manufacturer patient programs, and reduce the costs of pharmaceuticals under Medicare and Medicaid.
In these two pending patent families directed to the TRACER discovery platform, there are 10 applications pending, and are generally expected to commence expiration in 2039 and 2041, respectively, subject to possible patent term extensions.
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.
Orphan Drug Designation and Exclusivity A gene therapy 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.
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.
On a Pfizer Licensed CNS Product-by-Pfizer Licensed CNS Product basis, we are also eligible to receive (a) specified sales milestone payments of up to an aggregate of $175 million per Pfizer Licensed CNS Product and (b) tiered, escalating royalties in the mid- to high-single-digit percentages of annual net sales of each Pfizer Licensed CNS Product.
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.
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 specified event for each 2019 Neurocrine Program, or a 2019 Transition Event, Neurocrine agreed to assume responsibility for development, manufacturing and commercialization activities for such 18 Table of Contents 2019 Neurocrine Program from us and to pay milestones and royalties on future net sales as described further below.
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.
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 43 Table of Contents operations result in contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and governmental fines.
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.
Upon the exercise of any Novartis License Option, we have agreed to grant 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 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.
Subject to a cure period, either party may terminate the Pfizer Agreement, in whole or in part, subject to specified conditions, in the event of the other party’s uncured material breach.
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.
The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the biological product approval process, the FDA also will determine whether a REMS is necessary to assure the safe use of the biological product.
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 40 Table of Contents REMS is necessary to assure the safe use of the biological product.
Pfizer is also required to use commercially reasonable efforts to commercialize each Pfizer Licensed CNS Product in the United States and at least one Pfizer Major Market Country where Pfizer or its designated affiliates or sublicensees has received regulatory approval for such Pfizer Licensed CNS Product, subject to certain limitations. ​ 14 Table of Contents Intellectual Property Under the terms of the Pfizer Agreement, each of us and Pfizer 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 Pfizer 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 Pfizer Agreement and in the course of our and Pfizer’s activities under the Pfizer Agreement will follow inventorship under U.S. patent law.
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.
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. 38 Table of Contents ● Priority review .
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 .
Following the Transition Event, the parties shall negotiate the manufacturing and supply responsibilities, subject to the terms of any applicable 2019 Co-Co Agreement. ​ 19 Table of Contents Financial Terms Under the terms of the 2019 Neurocrine Collaboration Agreement, Neurocrine has paid us an upfront payment of $115.0 million.
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.
This reduces the likelihood that the FXN protein expressed by AAV gene therapy will trigger a harmful immune response. Preclinical Studies We initially conducted preclinical studies in non-human primates and achieved high FXN expression levels within the target sensory ganglia, or clusters of neurons, along the spinal region following intrathecal injection.
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.
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. ● Breakthrough therapy designation .
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. 42 Table of Contents ● Breakthrough therapy designation .
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. ● Regenerative advanced therapy .
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.
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.
Further, the legislation subjects drug manufacturers to civil monetary penalties and a 47 Table of Contents 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.
Under the 2023 Neurocrine Amended and Restated Investor Agreement, Neurocrine’s right to designate an individual to serve as a director on the Company’s board of directors and the Company’s agreement to nominate such individual for election to the Company’s board of directors is subject to specified conditions and shall terminate upon the earliest of (a) Neurocrine holding less than 10% of the Company’s outstanding common stock; (b) a change of control of the Company or Neurocrine; (c) a liquidation or dissolution of the Company; and (iv) 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 the Company and subject to specified conditions, directly or indirectly acquire shares of the Company’s 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 the Company (the “Standstill Restrictions”).
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.
The Standstill Restrictions and Lock-Up Restrictions also terminate upon the deregistration of the Company’s common stock, if earlier. The Lock-Up Restrictions and Voting Agreement also terminate on a change of control of the Company or the date on which Neurocrine and its affiliates beneficially own less than three percent of the common stock of the Company on an outstanding basis.
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.
We co-own a sixth patent family with eight 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.
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.
Pfizer is required to use commercially reasonable efforts to develop and obtain regulatory approval for at least one Pfizer Licensed CNS Product for which Pfizer has 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 a Pfizer Major Market Country, subject to certain limitations.
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.
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. 40 Table of Contents U.S.
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.
Further, Neurocrine has also agreed not to, and to cause its affiliates not to, sell or transfer any shares of the Company without the prior written approval of the Company, subject to specified conditions (the “Lock-Up Restrictions”). ​ In addition, pursuant to the terms of the 2023 Neurocrine Amended and Restated Investor Agreement, Neurocrine has agreed that any shares of the Company 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 the Company’s board of directors and has granted the Company an irrevocable proxy with respect to the foregoing (the “Voting Agreement”). 24 Table of Contents ​ Each of the Standstill Restrictions, the Lock-Up Restrictions, and the Voting Agreement terminate upon the earliest to occur of: (i) the date that is the third anniversary of the effective date of the 2023 Neurocrine Amended and Restated Investor Agreement and (ii) a liquidation or dissolution of the Company.
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 22 Table of Contents 2023 Neurocrine Amended and Restated Investor Agreement and (ii) our liquidation or dissolution.
Onyia, or another individual designated by Neurocrine, to be nominated for election to the Company’s board of directors when Dr. Onyia’s initial term is scheduled to expire.
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.
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 non-human primates.
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.
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 Pfizer, on a rolling basis, the performance characteristics identified for all such capsid candidates that we identify during the Pfizer Research Term, if and when available.
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.
More recently, we conducted preclinical studies in non-human primates with IV injection and achieved target FXN expression levels within sensory ganglia and the heart. The levels of FXN expression observed in the brain using an AAV vector were, on average, greater than FXN levels present in control normal human brain tissue.
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.
In addition, in October 2020, 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 products from Canada into the United States.
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.
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 a joint steering committee, or JSC, we have operational responsibility, subject to certain exceptions, for the conduct of each 2019 Neurocrine Program prior to the Transition Event for each Program, as described below, and are required to use commercially reasonable efforts to develop the 2019 Collaboration Products.
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.
Clinical trials are conducted under written clinical trial protocols detailing, among other things, the objectives of the study, inclusion and exclusion criteria, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated.
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 36 Table of Contents evaluated.
Our principal executive offices are located at 64 Sidney Street, Cambridge, MA 02139. Other operations, including laboratory space, are located at 75 Hayden Avenue, Lexington, MA. We lease our office and laboratory space, which consist of approximately 26,148 square feet located in Cambridge, Massachusetts and 32,142 square feet located in Lexington, MA.
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.
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.
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.
Under the 2019 Neurocrine Collaboration Agreement, we agreed to collaborate on the conduct of the four 2019 Neurocrine 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 2019 Discovery Program, on a worldwide basis.
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.
With Novartis’ option exercise on two Initial Novartis Targets, we are entitled to receive a $25.0 million option exercise payment during the first half 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 the Novartis Licensed Products incorporating the Novartis Licensed Capsids.
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.
Patents that grant from these pending provisional and non-provisional applications are generally expected to commence expiration in 2042 and 2043, subject to possible patent term extensions. We also own five patent families pending in the United States and foreign jurisdictions directed to capsid variants generated using other methodologies.
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.
Orphan-drug exclusivity also could block the approval of one of our products for 39 Table of Contents seven years if a competitor obtains approval of the same gene therapy as defined by the FDA.
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.
Patents that grant from this patent family are generally expected to commence expiration in 2036, subject to possible patent term extensions. Delivery We own one pending patent family with one patent application directed to cannula delivery system and methods of use.
Patents that grant from 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.
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 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 17 Table of Contents and Japan, each of which we refer to as a Novartis Major Market Country, subject to certain limitations.
Pfizer may also terminate the Pfizer 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.
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.
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 and must monitor the trial until completed.
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.
During the Novartis Research Term, as applicable, we may, at our sole discretion and expense, conduct further research activities to identify additional TRACER capsids.
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

219 edited+70 added−46 removed538 unchanged
Biggest changeWe anticipate that our expenses will increase substantially if, and as, we: ● conduct preclinical development activities and initiate investigational new drug, or IND, application-enabling studies and clinical trials in connection with our tau antibody program and our SOD1 ALS gene therapy program; ● continue investing in our gene therapy platform to optimize capsid engineering and payload development, manufacturing, dosing, and delivery techniques by continuing to develop our proprietary antibodies and vectorized antibody platform; ● increase our investment in and support for TRACER TM (Tropism Redirection of AAV by Cell Type-Specific Expression of RNA), our proprietary discovery platform to facilitate the selection of AAV capsids 45 Table of Contents 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; ● 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 a collaboration with Neurocrine entered into in January 2019, or the 2019 Neurocrine Collaboration Agreement, and our GBA1 gene therapy program pursuant to our collaboration and license agreement with Neurocrine entered into on January 8, 2023, or the 2023 Neurocrine 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 and commercial 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 and our operations as a public company; ● increase our product liability and clinical trial insurance coverage as we expand our clinical trials and commercialization efforts; and ● continue to operate as a public company.
Biggest changeThe net losses we incur may fluctuate significantly from quarter to quarter. ​ We anticipate that our expenses will increase substantially if, and 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 TM (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; 50 Table of Contents ● 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 ● continue to operate as a public company.
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.
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.
In addition, if we make manufacturing or formulation changes to our product candidates, such as our previous transition from an HEK 293-based production system to a baculovirus/Sf9 AAV production system or as a result of unanticipated clinical trial results, we may need to conduct additional studies to bridge our modified product candidates to earlier versions.
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.
I f any ongoing or future collaboration or option and license agreements were to be terminated, our business financial condition, results of operations and prospects could be harmed.
I f 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.
If any ongoing or future collaboration or option and 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.
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.
Following the exit of the United Kingdom, or UK, from the European Union, the United Kingdom’s the Data Protection Act of 2018 applies to the processing of personal data that takes place in the United Kingdom and includes parallel obligations to those set forth by GDPR.
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.
Ethical, social and legal concerns about gene therapy could result in additional regulations restricting or prohibiting our products.
Ethical, social and legal concerns about gene therapy could result in additional regulations restricting or prohibiting our gene therapy products.
Negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of our product candidates and adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates.
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.
Among other things, these provisions: ● establish a classified board of directors such that only one of three classes of members of the board is elected each year; ● allow the authorized number of our directors to be changed only by resolution of our board of directors; ● limit the manner in which stockholders can remove directors from the board; ● establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors; ● require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; ● limit who may call stockholder meetings; 102 Table of Contents ● 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.
Among other things, these provisions: ● establish a classified board of directors such that only one of three classes of members of the board is elected each year; ● allow the authorized number of our directors to be changed only by resolution of our board of directors; ● limit the manner in which stockholders can remove directors from the board; ● establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors; ● require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; ● limit who may call stockholder meetings; 108 Table of Contents ● 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.
In the event we are unable to achieve milestones necessary to demonstrate progress on our programs relevant to our ongoing collaborations with Neurocrine, Neurocrine may be unwilling to fund these programs at the desired levels or at all, which could require us to fund these programs to a greater extent than we have expected, to decline to pursue certain program objectives or to discontinue one or more of the programs.
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.
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 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; 48 Table of Contents ● 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 .
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 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 .
We may encounter substantial delays or difficulties in commencement, enrollment or completion of our preclinical studies or clinical trials, or may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities, which could prevent us from commercializing our current and future product candidates on a timely basis, if at all.
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.
In addition, health care organizations and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing.
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.
Additionally, because some patients with the diseases we are targeting in the United States, the European Union, and elsewhere may have increased susceptibility to COVID-19, the COVID-19 pandemic could limit the number of patients willing to participate in clinical trials related to our products or amenable to treatment with our products, which would harm our results of operations and our business.
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.
Other events that may prevent successful or timely completion of clinical development include: ● delays in reaching a consensus with regulatory authorities or collaborators on trial design, implementation, management, or other aspects of the clinical trial; ● delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites; ● delays in opening clinical trial sites or obtaining required IRB or independent ethics committee approval at each clinical trial site; ● as a result of a serious adverse event or after an inspection of our clinical trial operations or trial sites or the decision by us or our collaborators, 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 serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; ● occurrence of serious adverse events in trials of the same class of agents conducted by other sponsors; 56 Table of Contents ● 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.
Other events that may prevent successful or timely completion of clinical development include: ● delays in reaching a consensus with regulatory authorities or collaborators on trial design, implementation, management , or other aspects of the clinical trial; ● delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites; ● delays in opening clinical trial sites or obtaining required IRB or independent ethics committee approval at each clinical trial site; 60 Table of Contents ● 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.
If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory authority may: ● issue a warning letter asserting that we are in violation of the law; ● seek an injunction or impose administrative, civil or criminal penalties or monetary fines; ● suspend or withdraw regulatory approval; 62 Table of Contents ● 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.
If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory authority may: ● issue a warning letter asserting that we are in violation of the law; ● seek an injunction or impose administrative, civil or criminal penalties or monetary fines; 67 Table of Contents ● 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.
As a result, we may not be able to prevent competitors from developing and commercializing competitive products in territories included in all of our licenses. These licenses may also require us to grant back certain rights to licensors and to pay certain amounts relating to the use of the licensed intellectual property.
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: ● others may be able to make gene therapy products that are similar to our product candidates but that are not covered by the claims of the patents that we own, license or may access in the future; ● we, or our license partners or current or future collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that we license or may own in the future; ● we, or our license partners or current or future collaborators, might not have been the first to file patent applications covering certain of our or their inventions; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or licensed intellectual property rights; ● it is possible that our pending patent applications or those that we may own in the future will not lead to issued patents; ● issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● we may not develop additional proprietary technologies that are patentable; ● the patents of others may have an adverse effect on our business; and 98 Table of Contents ● 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.
For example: ● 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; ● 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; ● the patents of others may have an adverse effect on our business; and 104 Table of Contents ● 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.
A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended per FDA-approved product, and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended.
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.
Patient enrollment and trial completion are affected by many factors including: ​ ● perceived risks and benefits of AAV gene therapy approaches for the treatment of neurological and other diseases; 54 Table of Contents ● formulation changes to our product candidates, which may require us to conduct additional clinical studies to bridge our modified product candidates to earlier versions; ● size of the patient population and process for identifying patients; ● design of the trial protocol; ● eligibility and exclusion criteria; ● patients with preexisting antibodies to the gene therapy vector that preclude their participation in the trial; ● perceived risks and benefits of the product candidate under study; ● availability of competing therapies and clinical trials; ● severity of the disease under investigation; ● availability of genetic testing for potential patients; ● proximity and availability of clinical trial sites for prospective patients; ● lack of adequate compensation of patients; ● ability to obtain and maintain patient consent; ● risk that enrolled patients will drop out before completion of the trial; ● our ability to locate appropriately trained physicians to conduct such clinical trials, particularly for clinical trials 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; ● patient referral practices of physicians; and ● ability to monitor patients adequately during and after treatment.
Patient enrollment and trial completion are affected by many factors including: ​ ● 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; 59 Table of Contents ● 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; ● patient referral practices of physicians; and ● ability to monitor patients adequately during and after treatment.
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. 96 Table of Contents 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.
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. 102 Table of Contents 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.
We have recently 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.
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.
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. 90 Table of Contents 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.
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. 96 Table of Contents 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.
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. 104 Table of Contents ITEM 1B.
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. 110 Table of Contents ITEM 1B.
In 2020, former President Trump issued several executive orders intended to lower the costs of prescription drug products and certain provisions in these orders have been incorporated into regulations.
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.
Even with the requisite approvals from the FDA in the United States, EMA in the European Union and other regulatory authorities internationally, the commercial success of our product candidates will depend, in part, on the support and acceptance of medical associations and technology assessment committees, physicians, patients and health care payors of gene therapy products in general, and our product candidates in particular, as medically necessary, cost-effective and safe.
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.
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. 92 Table of Contents 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.
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. 98 Table of Contents 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.
The market price for our common stock may be influenced by many factors, including: ● our success in commercializing any product candidates for which we obtain marketing approval; ● regulatory action and results of clinical trials of our product candidates or those of our competitors; ● the success of competitive products or technologies; ● the results of clinical trials of our product candidates; ● the results of clinical trials of product candidates of our competitors; ● the commencement, termination, and success of our collaborations, including the ability or willingness of our collaboration partners to fulfill their obligations to us; ● regulatory or legal developments in the United States and other countries; ● developments or disputes concerning patent applications, issued patents or other proprietary rights; ● the recruitment or departure of key personnel; ● the level of expenses related to any of our product candidates or clinical development programs; ● the results of our efforts to discover, develop, acquire or in-license additional product candidates or technologies, the cost of commercializing such product candidates, and the cost of development of any such product candidates or technologies; ● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; ● variations in our financial results or those of companies that are perceived to be similar to us; 100 Table of Contents ● 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; ● general economic, industry and market conditions; and ● other factors described in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K.
The market price for our common stock may be influenced by many factors, including: ● our success in commercializing any product candidates for which we obtain marketing approval; ● regulatory action and results of clinical trials of our product candidates or those of our competitors; ● the success of competitive products or technologies; ● the results of clinical trials of our product candidates; ● the results of clinical trials of product candidates of our competitors; ● the commencement, termination, and success of our collaborations, including the ability or willingness of our collaboration partners to fulfill their obligations to us; ● regulatory or legal developments in the United States and other countries; ● developments or disputes concerning patent applications, issued patents or other proprietary rights; ● the recruitment or departure of key personnel; ● the level of expenses related to any of our product candidates or clinical development programs; ● the results of our efforts to discover, develop, acquire or in-license additional product candidates or technologies, the cost of commercializing such product candidates, and the cost of development of any such product candidates or technologies; 106 Table of Contents ● 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; ● 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.
Medical events such as the COVID-19 pandemic that emphasize harmful effects of certain viruses could also indirectly foster negative public perception of virus-based therapies.
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.
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; ● 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; ● 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.
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; 51 Table of Contents ● 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; ● 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 ret aining qualified personnel.
While we believe that our gene therapy platform, vectorized antibody 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.
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.
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: ● 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 55 Table of Contents ● 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.
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: ● 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.
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 84 Table of Contents third-party payors.
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 90 Table of Contents third-party payors.
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 88 Table of Contents internal accounting controls for international operations.
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 94 Table of Contents internal accounting controls for international operations.
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 87 Table of Contents 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.
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 93 Table of Contents 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.
The degree of market 86 Table of Contents acceptance of gene therapy products and, in particular, our product candidates, if approved for commercial sale, will depend on several factors, including: ● the efficacy and safety of such product candidates as demonstrated in clinical trials; ● the potential and perceived advantages of product candidates over alternative treatments; ● the cost of treatment relative to alternative treatments; ● the clinical indications for which the product candidate is approved by the FDA or the European Commission, or other regulatory authorities; ● patient awareness of, and willingness to seek, genotyping; ● the willingness of physicians to prescribe new therapies; ● the willingness of physicians to undergo specialized training with respect to administration of our product candidates; ● the willingness of the target patient population to try new therapies; ● the prevalence and severity of any side effects; ● product labeling or product insert requirements of the FDA, EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling or restrictions on the use of our products together with other medications; ● relative convenience and ease of administration; ● 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.
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: ● 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.
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. 89 Table of Contents 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.
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. 95 Table of Contents 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.
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- 83 Table of Contents 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.
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.
Upon our receipt of topline data from the first Phase 1 clinical trial for a product 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.
Upon our receipt of topline data from the first Phase 1 clinical trial for a product 89 Table of Contents 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.
We may not prevail in any lawsuits that we 93 Table of Contents 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.
We may not prevail in any lawsuits that we 99 Table of Contents 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.
Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others or are disclosed or used in violation of these agreements.
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.
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 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.
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.
Such efforts may require more resources than are typically required due to the complexity and uniqueness of our potential products.
Such efforts may require more resources than are typically required due to the complexity and uniqueness of certain of our potential products.
These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products. Specifically, actions 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.
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.
For example, an April 2022 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.
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.
We expect to take advantage of some or all of the available exemptions until we cease to be a smaller reporting company.
We expect to continue to take advantage of some or all of the available exemptions until we cease to be a smaller reporting company.
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. 103 Table of Contents General Risk Factors We might not be able to utilize a significant portion of our net operating loss carryforwards.
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. 109 Table of Contents General Risk Factors We might not be able to utilize a significant portion of our net operating loss carryforwards.
It is difficult to predict what third-party payors will decide with respect to the coverage 85 Table of Contents 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.
It is difficult to predict what third-party payors will decide with respect to the coverage 91 Table of Contents 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.
Such collaborations, alliances, or option and license arrangements could therefore cause the market price of common stock to decline. The preclinical 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.
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.
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 58 Table of Contents cost of developing the drug or biological product will be recovered from sales in the United States.
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.
Any ruling of a similar scope in other countries could affect the scope of our intellectual property rights. The ambiguities and changing law in all countries as to patenting genetic material may directly affect our ability to secure and/or maintain patent protection for our products.
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.
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 reply on the reference product, sponsor’s data or submit the application as a biosimilar application.
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.
The success of our business depends upon our ability to identify, develop and commercialize product candidates generated through our gene therapy and vectorized antibody platforms. Research programs to identify new product candidates require substantial technical, financial and human resources. Our product candidates are in preclinical development.
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.
The few regulatory approvals 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.
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.
The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors.
The 86 Table of Contents 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.
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 gene therapy and vectorized antibody platforms.
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.
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 99 Table of Contents 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.
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.
Regardless of merit or eventual outcome, liability claims may result in: ● decreased demand for any product candidates that we may develop; ● loss of revenue; ● substantial monetary awards to trial participants or patients; ● significant time and costs to defend the related litigation; ● withdrawal of clinical trial participants; ● the inability to commercialize any product candidates that we may develop; and ● injury to our reputation and significant negative media attention.
Regardless of merit or eventual outcome, liability claims may result in: ● decreased demand for any product candidates that we may develop; ● loss of revenue; 87 Table of Contents ● substantial monetary awards to trial participants or patients; ● significant time and costs to defend the related litigation; ● withdrawal of clinical trial participants; ● the inability to commercialize any product candidates that we may develop; and ● injury to our reputation and significant negative media attention.
Because we currently rely on certain third parties to manufacture all or part of our product candidates and to perform quality testing, and because we collaborate with various organizations and academic institutions for the advancement of our gene therapy and vectorized antibody platforms and pipeline, we must, at times, share our proprietary technology and confidential information, including trade secrets, with them.
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.
In other countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product.
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.
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 gene therapy company and have not yet generated revenues from the sales of our product candidates.
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.
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.
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 107 Table of Contents ● not being required to furnish a stock performance graph in our annual report.
Any regulatory approvals that we receive for our product candidates also may be subject to a REMS, limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the quality, safety and efficacy of the product.
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.
Our relationship with any current or future collaborators, optionees, or licensees may pose several risks, including the following: ● 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; ● 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; ● 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 68 Table of Contents 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; ● 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.
Our relationship with any current or future collaborators, optionees, or licensees may pose several risks, including the following: ● 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; 73 Table of Contents ● 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; ● 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.
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive, and uncertain process that takes years to complete. We may never generate the necessary data or results required to maintain the financial support of our collaborators or obtain marketing approval and achieve product sales.
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 53 Table of Contents sales.
If we are unable to raise capital or enter into business development transactions when needed or on acceptable terms, we could be forced to delay, reduce or eliminate certain of our research and development programs or any future commercialization efforts. Our operations have consumed significant amounts of cash since inception.
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. ​ 52 Table of Contents Our operations have consumed significant amounts of cash since inception.
Consequently, any predictions about our future success or viability may not be as accurate as they could be if we 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.
Consequently, any predictions about our future success or viability may not be as accurate as they could be if we 54 Table of Contents 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.
We have agreements in place with our contract manufacturers pursuant to which we are collaborating on cGMP manufacturing processes and analytical methods for the manufacture of our AAV product candidates.
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.
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 66 Table of Contents 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.
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.
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 69 Table of Contents significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators, optionees, and licensees.
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 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 gene therapy and vectorized antibody platforms.
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.
A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on our business, financial condition, results of operations and prospects. 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.
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.
The legislation also requires manufacturers to pay 77 Table of Contents 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.
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.
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 the collaboration or option and license transactions.
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 74 Table of Contents the collaboration or option and license transactions.
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 conducted in accordance with the applicable protocol, legal, quality, regulatory and scientific standards.
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 75 Table of Contents conducted in accordance with the applicable protocol, legal, quality, regulatory and scientific standards.
If the FDA does not accept the data from any trial or trial site outside the United States, it would likely result in the need for additional trials, which would be costly and time-consuming and would delay or permanently halt our development of the applicable product candidates.
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.
Any of these occurrences may harm our ability to develop other product candidates and may harm our business, financial condition and prospects significantly. Additionally, if any of our product candidates receives marketing approval, the FDA could require us to adopt a REMS to ensure that the benefits outweigh its risks.
Any of these occurrences may harm our ability to develop other product candidates and may harm our business, financial condition and prospects significantly. 62 Table of Contents 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.
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. 59 Table of Contents 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.
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.
In March 2022, we entered into the Novartis 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.
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.
Furthermore, the use of NOL carryforwards may become subject to an annual limitation under Section 382 of the Code and similar state provisions in the event of certain cumulative changes in the ownership interest of significant shareholders in excess of 50 percent over a three-year period.
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.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIE S Our corporate headquarters are located in Cambridge, Massachusetts. Other operations, including laboratory space, are located in Lexington, Massachusetts. We lease our office and laboratory space, which consist of approximately 26,148 square feet located in Cambridge, Massachusetts and 32,142 square feet located in Lexington, Massachusetts.
Biggest changeITEM 2. PROPERTIE S 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

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile the outcome of any such matters cannot be predicted with certainty, as of December 31, 2022, we were not party to any material pending proceedings. No material governmental proceedings are pending or, to our knowledge, contemplated against us.
Biggest changeWhile 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis 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, 2022 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, 2022, we granted to two executives restricted stock unit awards settleable for an aggregate of 163,000 shares of our common stock.
Biggest changeThis 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 options and 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).
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. ​ ITEM 6. RESERVED ​ ​
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. 112 Table of Contents ITEM 6. RESERVED ​ ​
Prior to this time, there was no public market for our common stock. ​ Stockholders ​ As of March 1, 2023, there were approximately 12 holders of record of our common stock.
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.
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On October 17, 2022, we granted stock options to one new employee to purchase 105 Table of Contents an aggregate of 60,000 shares of our common stock at an exercise price of $6.01 per share.
Removed
On November 28, 2022, we granted stock options to one new employee to purchase an aggregate of 54,000 shares of our common stock at an exercise price of $5.57 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes our research and development expenses for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ 2022 2021 Change ​ ​ ​ (in thousands) ​ Employee and consultant ​ $ 29,209 $ 36,385 ​ $ (7,176) ​ External research and development ​ 15,679 ​ 18,486 ​ (2,807) ​ Facilities and other ​ 7,863 ​ 9,483 ​ (1,620) ​ Professional fees ​ 8,014 ​ 9,433 ​ (1,420) ​ Total research and development expenses ​ $ 60,764 ​ $ 73,787 ​ $ (13,023) ​ ​ The decrease in research and development expense for the year ended December 31, 2022 was primarily attributable to the following: ​ ● approximately $7.2 million for decreased compensation costs and stock-based compensation costs associated with lower headcount in research and development functions compared to prior year; ​ ● approximately $2.8 million for decreased external research and development costs primarily related to a reduction in clinical and manufacturing activities to prepare for the first-in-humans trial of the VY-HTT01 for Huntington’s disease and a reduction in external costs incurred in connection with the 2019 Neurocrine Collaboration Agreement, partially offset by the technology access fee for our license agreement with Touchlight IP Limited, or the Touchlight License Agreement ; ​ ● approximately $1.6 million of decreased facility costs primarily related to the termination of the lease for office and laboratory space at 75 Sidney Street during the second quarter of 2022 ; and ​ ● approximately $1.4 million for decreased professional fees and related expenses to support the pipeline programs.
Biggest changeThe following table summarizes our research and development expenses for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ 2023 2022 Change ​ ​ ​ (in thousands) ​ Employee and consultant ​ $ 42,445 $ 29,209 ​ $ 13,236 ​ External research and development ​ 34,185 ​ 15,679 ​ 18,506 ​ Facilities and other ​ 6,790 ​ 7,863 ​ (1,073) ​ Professional fees ​ 8,752 ​ 8,013 ​ 739 ​ Total research and development expenses ​ $ 92,172 ​ $ 60,764 ​ $ 31,408 ​ ​ 118 Table of Contents 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 consideration may include fixed consideration or variable consideration. At the inception of each arrangement that includes variable consideration, we evaluate the amount of potential payment and the likelihood that the payments will be received.
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.
Cash Flows from Financing Activities 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 $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.
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, 2022, we have requalified as a “smaller reporting company,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.
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 may cease to qualify as a smaller reporting company as early as June 30, 2023, 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, 2023, and any portions of our definitive proxy statement relating to our 2024 Annual Meeting of Stockholders incorporated by reference therein. ​
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. ​
Our expenses will increase if: ​ ● we are required by 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; ​ ● 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, business development, legal and human resource functions.
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.
If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. ​ Contractual Obligations ​ We enter into agreements in the normal course of business with clinical research organizations, contract manufacturing organizations, and institutions to license intellectual property.
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 Table of Contents 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.
If our development efforts are successful, we may also generate revenue from product sales. ​ Expenses ​ Research and Development Expenses ​ Research and development expenses consist primarily of costs incurred for our research activities, including our program discovery efforts, and the development of our programs, gene therapy platform, proprietary antibodies, and vectorized antibody platform which include: ​ ● employee- related expenses including salaries, benefits, and stock-based compensation expense; ● costs of funding research performed by third parties that conduct research and development, preclinical activities, manufacturing and production design on our behalf; ● the cost of purchasing 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 agreements.
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.
The terms of these arrangements typically include payment of one or more of the following: non- 109 Table of Contents 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 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.
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. ​ 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.
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 Table of Contents 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.
We do not have any committed external source of funds other than the 115 Table of Contents 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.
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.
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. ​ 108 Table of Contents 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.
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 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 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 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.
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 Table of Contents 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.
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. 116 Table of Contents ​ We expect to take advantage of some or all of the available exemptions until we cease to be a smaller reporting company.
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.
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 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.
The effects of material revisions in estimates, if any, will be reflected in the financial statements prospectively from the date of change in estimates. ​ While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies used in the preparation of our financial statements require the most significant judgments and estimates.
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.
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 tau antibody program and our SOD1 ALS gene therapy program; ● continue investing in our gene therapy platform to optimize capsid engineering and payload development, manufacturing, dosing, and delivery techniques by continuing to develop our proprietary antibodies and vectorized antibody platform; ● 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 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; ● 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 a collaboration with Neurocrine entered into in January 2019, or the 2019 Neurocrine Collaboration Agreement, and our GBA1 gene therapy program pursuant to our collaboration and license agreement with Neurocrine entered into on January 8, 2023, or the 2023 Neurocrine 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 and commercial 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 and our operations as a public company; ● increase our product liability and clinical trial insurance coverage as we expand our clinical trials and commercialization efforts; and ● continue to operate as a public company.
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 Table of Contents ● continue to operate as a public company.
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 dedicated to breaking through barriers in gene therapy and neurology.
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 reported a net loss of $71.2 million for the year ended December 31, 2021. We expect to continue to incur significant expenses and operating losses for the foreseeable future.
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.
As our development programs progress and we identify product candidates and initiate preclinical studies and clinical trials, we expect general and administrative expenses to increase to support these additional research and development activities. ​ Other Income, Net ​ Other income, net consists primarily of an employee retention tax credit under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, and 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.
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.
For additional information about our revenue recognition policy, see the section titled “—Critical Accounting Policies and Estimates—Revenue.” ​ For the foreseeable future, we expect substantially all of our revenue will be generated from the 2019 Neurocrine Collaboration Agreement and the 2023 Neurocrine Collaboration Agreement, the Pfizer Agreement, the Novartis Agreement, and any other strategic collaborations and out-licensing arrangements we may enter into in the future.
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.
We expect our expenses to increase in the longer term, however, as we continue the research and development of, conduct clinical trials of, and seek marketing approval for, our product candidates and as we continue to enter into or conduct activities in connection with our collaboration agreements.
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.
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 pursuant to the Pfizer Agreement.
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.
Net cash used in operating activities was $96.7 million during the year ended December 31, 2020.
Net cash used in operating activities was $12.5 million during the year ended December 31, 2022.
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.
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.
A significant portion of revenue recognized from the 2019 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.
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 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.
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.
In addition to leveraging TRACER capsids in potential licensing arrangements, we are advancing our own proprietary pipeline of drug candidates for neurological diseases. Our wholly-owned prioritized pipeline programs include: superoxide dismutase 1, or SOD1, gene therapy for amyotrophic lateral sclerosis, or ALS, and an anti-tau antibody for Alzheimer’s disease.
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 estimate the expected remaining costs to complete the research and development services for each performance obligation. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure and related 110 Table of Contents revenue recognition.
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.
As our development programs progress and as we identify product candidates and initiate preclinical studies and clinical trials, we expect research and development costs to increase.
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 Table of Contents to continue to increase.
Based upon our current operating plan, we expect that our existing cash, cash equivalents, and marketable securities at December 31, 2022, together with the upfront payment received in February 2023 in connection with the 2023 Neurocrine Collaboration Agreement, along with amounts expected to be received as reimbursement for development costs under our 2019 Neurocrine Agreement and 2023 Neurocrine Collaboration Agreement, will enable us to meet our planned operating expenses and capital expenditure requirements into 2025 .
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.
In addition to these two wholly-owned programs, we are actively advancing two programs in collaboration with Neurocrine Biosciences, Inc., or Neurocrine: a glucocerebrosidase 1, or GBA1, gene therapy program for Parkinson’s disease and other GBA1-mediated diseases, and a FXN gene therapy program for Friedreich’s ataxia.
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.
We refer to our option and license agreement with Pfizer Inc., or Pfizer, as the Pfizer Agreement, and to our option and license agreement with Novartis Pharma AG, or Novartis, as the Novartis Agreement. ​ 107 Table of Contents 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.
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.
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. ​ Our general and administrative expenses have decreased relative to pre-2021 levels as a result of our strategic restructuring.
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.
Other income, net during the year ended December 31, 2022 primarily related to an employee retention tax credit under the CARES Act and interest income on marketable securities 112 Table of Contents balances, while other income, net during the year ended December 31, 2021 primarily related to 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 of our common stock, strategic collaborations and option and license arrangements, including our 2019 Neurocrine Agreement and 2023 Neurocrine Collaboration Agreement, our ongoing option and license arrangements with Pfizer and Novartis under the Pfizer Agreement and the Novartis Agreement, respectively, and with our prior collaboration agreements.
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.
For the year ended December 31, 2022, we recognized $40.9 million of collaboration revenue from the Pfizer Agreement and the 2019 Neurocrine Collaboration Agreement.
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.
We have identified a lead development candidate for our anti-tau antibody program and we expect to identify a lead development candidate for our SOD1 program during the first half of 2023. We expect to file INDs for both programs in 2024.
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.
Net cash provided by investing activities was $113.0 million during the year ended December 31, 2020. The cash provided by investing activities for the year ended December 31, 2020 was primarily due to proceeds from maturities of marketable securities of $195.5 million, offset by purchases of marketable securities of $70.4 million and purchases of property and equipment of $12.1 million.
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 Table of Contents 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.
The decrease in general and administrative expense was primarily attributable to the following: ​ ● approximately $3.1 million for decreased compensation costs and stock-based compensation costs associated with lower headcount in general and administrative functions as compared to prior year; ​ ● approximately $1.6 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 ; and ​ ● approximately $1.5 million for decreased legal costs and intellectual property related expenses. ​ Other Income, Net Other income, net of approximately $4.4 million was recognized during the year ended December 31, 2022, as compared to $2.4 million during the year ended 2021.
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.
The increase in collaboration revenue was largely a result of revenue recognized in connection with Pfizer’s decision to exercise the first material right for the option to receive an exclusive license, or the Pfizer License Option, along with the expiration of the second material right associated with the Pfizer License Option.
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.
If we are unable to raise capital or enter into business development transactions when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts. ​ Based upon our current operating plan, we expect that our existing cash, cash equivalents, and marketable securities at December 31, 2022 , together with the upfront payment received in February 2023 in connection with the 2023 Neurocrine Collaboration Agreement, along with amounts expected to be received as reimbursement for development costs under our 2019 Neurocrine Agreement and 2023 Neurocrine Collaboration Agreement, will enable us 114 Table of Contents to meet our planned operating expenses and capital expenditure requirements into 2025.
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.
General and Administrative Expense General and administrative expense decreased by $6.3 million from $37.2 million for the year ended December 31, 2021 to $31.0 million for the year ended December 31, 2022.
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.
Results of Operations Comparison of the years ended December 31, 2022 and 2021: The following table summarizes our results of operations for the years ended December 31, 2022 and 2021, respectively, together with the changes in those items in dollars: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ 2022 2021 Change ​ ​ ​ (in thousands) ​ Collaboration revenue ​ $ 40,907 $ 37,415 $ 3,492 ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 60,764 ​ 73,787 ​ (13,023) ​ General and administrative ​ 30,980 ​ 37,246 ​ (6,266) ​ Total operating expenses ​ 91,744 ​ 111,033 ​ (19,289) ​ Other income, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income (expense) ​ 1,792 ​ (390) ​ 2,182 ​ Other income ​ 2,653 ​ 2,811 ​ (158) ​ Total other income, net ​ 4,445 ​ 2,421 ​ 2,024 ​ Loss before income taxes ​ ​ (46,392) ​ ​ (71,197) ​ ​ 24,805 ​ Income tax provision ​ ​ 16 ​ ​ — ​ ​ 16 ​ Net loss ​ $ (46,408) ​ $ (71,197) ​ $ 24,789 ​ Collaboration Revenue Collaboration revenue was $40.9 million for the year ended December 31, 2022, and $37.4 million for the year ended December 31, 2021.
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 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ 2023 2022 Change ​ ​ ​ (in thousands) ​ Collaboration revenue ​ $ 250,008 $ 40,907 $ 209,101 ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 92,172 ​ 60,764 ​ 31,408 ​ General and administrative ​ 35,822 ​ 30,980 ​ 4,842 ​ Total operating expenses ​ 127,994 ​ 91,744 ​ 36,250 ​ Other income, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 11,721 ​ 1,792 ​ 9,929 ​ Other income ​ 3 ​ 2,653 ​ (2,650) ​ Total other income, net ​ 11,724 ​ 4,445 ​ 7,279 ​ Income (loss) before income taxes ​ ​ 133,738 ​ ​ (46,392) ​ ​ 180,130 ​ Income tax provision ​ ​ 1,408 ​ ​ 16 ​ ​ 1,392 ​ Net income (loss) ​ $ 132,330 ​ $ (46,408) ​ $ 178,738 ​ Collaboration Revenue Collaboration revenue was $250.0 million and $40.9 million for the years ended December 31, 2023 and 2022, respectively.
To date, we have not recognized any consideration related to sales-based royalty revenue resulting from any of our collaboration arrangements. ​ We allocate the transaction price based on the estimated stand-alone selling price of each of the performance obligations. We must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract.
We 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.
Variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated are consistent with the amounts we would expect to receive for the satisfaction of each performance obligation. ​ The consideration allocated to each performance obligation is recognized as revenue when control is transferred for the related goods or services.
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.
This resulted in total revenue recognized of $40.0 million from Pfizer during the year ended December 31, 2022. The increase in collaboration revenue is partially offset by decreased revenue recognized under the 2019 Neurocrine Collaboration Agreement during the year ended December 31, 2022.
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.
Funding Requirements ​ Our expenses decreased during the year ended December 31, 2022 as compared with the prior year as a result of our strategic restructuring, the reevaluation of our product candidate pipeline, our strategic shift to invest in TRACER capsid development efforts, and our initiation of other cost-saving initiatives.
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.
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We believe the potential of both disciplines has been constrained by delivery challenges; we are leveraging expertise in capsid discovery and neuropharmacology to address these constraints. Our gene therapy platforms enable us to engineer, optimize, manufacture and deliver adeno-associated virus, or AAV, based gene therapies that we believe have the potential to safely provide durable efficacy.
Added
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.
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Our team of experts in the field of AAV gene therapy and neuroscience first identifies and selects diseases in which we believe an AAV gene therapy or other biological therapy will answer a high unmet medical need, be supported by target validation, offer an efficient path to human proof of biology, present robust preclinical pharmacology, and offer strong commercial potential.
Added
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.
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We then engineer and optimize an AAV vector or other biological therapy for activity in, efficacy in, or delivery to, the targeted tissue or cells. We are identifying proprietary AAV capsids, the outer viral protein shells that enclose genetic material that makes up the vector payload.
Added
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.
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Our team has developed a proprietary AAV capsid discovery platform called TRACER TM (Tropism Redirection of AAV by Cell Type-Specific Expression of RNA) that employs directed evolution to facilitate the selection of AAV capsids with enhanced tissue delivery characteristics, such as more effective delivery across the blood brain barrier, or BBB.
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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.
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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 non-human primates.
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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.
Removed
We believe that capsids we discover through our TRACER discovery platform, which we refer to as TRACER capsids, have the potential to significantly enhance the efficacy and safety of our single dose gene therapies, which we expect to be delivered with targeted surgical delivery or systemic infusions, as compared with conventional capsids.
Added
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.
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We also maintain a robust early research pipeline of wholly-owned and collaborative gene therapy programs for neurological diseases. 106 Table of Contents We have a history of incurring significant losses. We reported a net loss of $46.4 million for the year ended December 31, 2022. As of December 31, 2022, we had an accumulated deficit of $393.5 million.
Added
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.
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We refer to our collaboration agreement with Neurocrine dated as of January 28, 2019 as the 2019 Neurocrine Collaboration Agreement.
Added
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.
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We are in the early stages of development of our product candidates. On August 6, 2021, our board of directors approved a strategic restructuring plan to eliminate a portion of our workforce as part of an initiative to reduce expenses and enhance operations.
Added
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.
Removed
Our research and development costs have decreased relative to pre-2021 levels as a result of this strategic restructuring, and also due to the reevaluation of our product candidate pipeline, our strategic shift to invest in TRACER capsid development efforts, and our initiation of other cost-saving initiatives.
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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.
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As a result of the strategic restructuring, there are decreases including a reduction in personnel costs and fees paid to outside consultants, as well as other cost-saving initiatives including a reduction in facility-related expenditures.
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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 Table of Contents clinical trials in 2025.
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Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues in the period of adjustment.
Added
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.
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To date, we have not recognized any consideration related to the achievement of development, regulatory, or commercial milestone revenue resulting from any of our collaboration arrangements. ​ For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (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).
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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.
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We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. ​ Upfront payments and fees are recorded as contract liabilities within deferred revenue upon receipt or when due until we perform our obligations under these arrangements. Amounts are recorded as accounts receivable when our rights to consideration are unconditional.
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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.
Removed
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.
Added
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.
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During the fourth quarter of 2021, we recorded significant revenue associated with a change in estimate of the expected remaining costs to complete the research and development services for our performance obligations under the 2019 Neurocrine Collaboration Agreement, resulting in a significant decrease in revenue to be recorded in future periods.
Added
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.
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During the year ended December 31, 2021, collaboration revenue was entirely related to research services and cost reimbursement from the 2019 Neurocrine Collaboration Agreement.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed3 unchanged
Biggest changeOur primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments, including cash equivalents, are in the form of money market funds and marketable securities and are invested in U.S. Treasury notes.
Biggest changeOur primary exposure to 123 Table of Contents 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.
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, 2022. ​ ITEM 8.
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.

Other VYGR 10-K year-over-year comparisons