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What changed in REGENXBIO Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of REGENXBIO 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.

+439 added−456 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-28)

Top changes in REGENXBIO Inc.'s 2023 10-K

439 paragraphs added · 456 removed · 335 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

146 edited+44 added−66 removed214 unchanged
Biggest changeAlso under the Fast Track program, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.
Biggest changeA product under the Fast Track, Breakthrough Therapy, or RMAT programs may be eligible for “rolling review,” which means the FDA may consider for review sections of the BLA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application. 20 Table of Contents A BLA may be eligible for priority review if the product has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment, diagnosis or prevention of a serious or life-threatening disease or condition compared to marketed products.
The production of RNA in the cell is controlled by transcriptional elements called enhancers and promoters that are linked to the gene. We have designed optimized enhancer and promoter combinations with the goal of enabling sustained gene expression in particular cell types and potentially increasing durability of therapeutic effect.
The production of RNA in the cell is controlled by transcriptional elements called enhancers and promoters that are linked to the gene. We have designed optimized enhancer and promoter combinations with the goal of enabling sustained gene expression in particular cell types and potentially increasing the durability of therapeutic effect.
Delivery of the gene therapy and expression of the enzyme that is deficient within cells in the CNS could provide a permanent source of secreted I2S on the CNS side of the blood-brain barrier, allowing for long-term cross-correction of cells throughout the CNS.
Delivery of the gene therapy and expression of the enzyme that is deficient within cells in the CNS could provide a permanent source of secreted I2S enzyme on the CNS side of the blood-brain barrier, allowing for long-term cross-correction of cells throughout the CNS.
RGX‑314 is being developed as a novel, one-time treatment that includes the NAV AAV8 vector containing a gene for a monoclonal antibody fragment designed to inhibit VEGF activity, modifying the pathway for formation of new leaky blood vessels and retinal fluid accumulation. After delivery of RGX‑314, we believe retinal cells will continue to produce the anti-VEGF protein.
ABBV-RGX‑314 is being developed as a novel, one-time treatment that includes the NAV AAV8 vector containing a gene for a monoclonal antibody fragment designed to inhibit VEGF activity, modifying the pathway for formation of new leaky blood vessels and retinal fluid accumulation. After delivery of ABBV-RGX‑314, we believe retinal cells will continue to produce the anti-VEGF protein.
Federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, also may implicate the FCA; • federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; 24 Table of Contents • the federal Physician Payment Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services (CMS) information related to payments and other transfers of value to physicians and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members; • the Health Insurance Portability and Accountability Act of 1996 (HIPAA) imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; and • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to: items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances.
Federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, also may implicate the FCA; • federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • the federal Physician Payment Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services (CMS) information related to payments and other transfers of value to physicians and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members; • the Health Insurance Portability and Accountability Act of 1996 (HIPAA) imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; and • state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to: items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances.
Two separate routes of administration of RGX-314 to the eye are being evaluated: a subretinal delivery procedure as well as a targeted, in-office administration to the suprachoroidal space. We have licensed certain exclusive rights to the SCS Microinjector ® from Clearside Biomedical, Inc. (Clearside) to deliver gene therapy treatments to the suprachoroidal space of the eye.
Two separate routes of administration of ABBV-RGX-314 to the eye are being evaluated: a subretinal delivery procedure as well as a targeted, in-office administration to the suprachoroidal space. We have licensed certain exclusive rights to the SCS Microinjector ® from Clearside Biomedical, Inc. (Clearside) to deliver gene therapy treatments to the suprachoroidal space of the eye.
Our patent portfolio relating to RGX-202 includes three pending PCTs and two PCTs that have entered the national stage for which any issued U.S. or European patent would expire in 2040 or 2042, without taking into account any possible patent term adjustment or extension.
Our patent portfolio relating to RGX-202 includes two pending PCTs and three PCTs that have entered the national stage for which any issued U.S. or European patent would expire in 2040, 2042 or 2043 without taking into account any possible patent term adjustment or extension.
While we primarily rely upon internal manufacturing, we have agreements with several biologics contract development and manufacturing organizations (CDMOs) for production of material under cGMP requirements to support our current and future clinical trials, as well as potential future commercialization of our investigational AAV Therapeutics.
While we primarily rely upon internal manufacturing, we have agreements with biologics contract development and manufacturing organizations (CDMOs) for production of material under cGMP requirements to support our current and future clinical trials, as well as potential future commercialization of our investigational AAV Therapeutics.
In 2020, in our clinical trial for the in-office treatment of wet AMD, an investigational AAV Therapeutic was delivered to a patient using a novel, suprachoroidal delivery device for the first time. In 2020, we initiated a pivotal phase program for RGX-314 using an automated subretinal delivery device for the treatment of wet AMD.
In 2020, in our clinical trial for the in-office treatment of wet AMD, an investigational AAV Therapeutic was delivered to a patient using a novel, suprachoroidal delivery device for the first time. In 2020, we initiated a pivotal phase program for ABBV-RGX-314 using an automated subretinal delivery device for the treatment of wet AMD.
In October 2019, we exercised the option. This option and license agreement was amended in January 2023. Under the terms of the agreement, as amended, we are obligated to pay Clearside an upfront fee, royalties on net sales, and fees upon the achievement of various milestones.
In October 2019, we exercised the option. This option and license agreement was amended in January and September 2023. Under the terms of the agreement, as amended, we are obligated to pay Clearside an upfront fee, royalties on net sales, and fees upon the achievement of various milestones.
Stable to improved visual acuity was observed, with a mean BCVA of +12 letters from baseline at four years for Cohort 3 patients and -5 letters from baseline at three years for Cohort 4 patients following RGX-314 administration.
Stable to improved visual acuity was observed, with a mean BCVA of +12 letters from baseline at four years for Cohort 3 patients and -5 letters from baseline at three years for Cohort 4 patients following ABBV-RGX-314 administration.
We believe this strategy could provide rapid I2S delivery to the brain, potentially preventing the progression of cognitive deficits that otherwise occur in MPS II patients.
We believe this strategy could provide rapid I2S enzyme delivery to the brain, potentially preventing the progression of cognitive deficits that otherwise occur in MPS II patients.
RGX-202 is designed to support the delivery and targeted expression of genes throughout skeletal and heart muscle using the NAV AAV8 vector, and a well-characterized muscle-specific promoter (Spc5-12). We have received orphan drug product designation and rare pediatric disease designation from the FDA for RGX‑202.
RGX-202 is designed to support the delivery and targeted expression of genes throughout skeletal and heart muscle using the NAV AAV8 vector, and a well-characterized muscle-specific promoter (Spc5-12). We have received orphan drug product, Fast Track designation and rare pediatric disease designation from the FDA for RGX‑202.
Orphan Drug Designation Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is defined under the FD&C Act as 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 21 Table of Contents recovered from sales of the product.
Orphan Drug Designation Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is defined under the FD&C Act as 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.
Regulation 1394/2007/EC lays down specific rules concerning the authorization, supervision and pharmacovigilance of gene therapy medicinal products, somatic cell therapy medicinal products and tissue engineered products. The EMA’s Committee for Advanced Therapies (CAT) is responsible for assessing the quality, safety and efficacy of ATMP. ATMP include gene therapy medicinal products, somatic cell therapy medicinal products and tissue engineered products.
Regulation (EC) No 1394/2007 lays down specific rules concerning the authorization, supervision and pharmacovigilance of gene therapy medicinal products, somatic cell therapy medicinal products and tissue engineered products. The EMA’s Committee for Advanced Therapies (CAT) is responsible for assessing the quality, safety and efficacy of ATMP.
Additionally, marketing authorization may be granted to a similar product during the 10-year period of market exclusivity for the same therapeutic indication at any time if: • The second applicant can establish in its application that its product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior; • The holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or • The holder of the marketing authorization for the original orphan medicinal product cannot supply enough orphan medicinal product.
Additionally, marketing authorization may be granted to a similar product during the 10-year period of market exclusivity for the same therapeutic indication at any time if: • The second applicant can establish in its application that its product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior; 25 Table of Contents • The holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or • The holder of the marketing authorization for the original orphan medicinal product cannot supply enough orphan medicinal product.
Furthermore, some EU Member States impose direct or indirect controls on the profitability of the company placing the medicinal product on the market. In 2011, Directive 2011/24/EU was adopted at the EU level. This Directive concerns the application of patients’ rights in cross-border healthcare.
Furthermore, some EU Member States impose direct or indirect controls on the profitability of the company placing the medicinal product on the market. In 2011, Directive 2011/24/EU on the application of patients’ rights in cross-border healthcare was adopted at the EU level.
The ten years of market exclusivity will be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior 26 Table of Contents to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.
The ten years of market exclusivity will be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.
Expedited Development and Review Programs The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drugs and biological products, including precision drugs or biological products, that meet certain criteria.
Expedited Development and Review Programs The FDA has a Fast Track program that is intended to expedite or facilitate the process for development and review of new drugs and biological products, including precision drugs or biological products, that meet certain criteria.
It is possible that the information that we post on our social media channels could be deemed material information. Therefore, we encourage investors, the media and others interested in our company to review the information that we post on our social media channels. 29 Table of Contents
It is possible that the information that we post on our social media channels could be deemed material information. Therefore, we encourage investors, the media and others interested in our company to review the information that we post on our social media channels. 28 Table of Contents
DR is the leading cause of vision loss in working-age adults and the incidence is expected to continue to grow significantly with the prevalence of diabetes. 6 Table of Contents Frequent anti-VEGF injections in the eye have been shown to reduce the risk of blindness in randomized controlled clinical trials and are approved for the treatment of wet AMD and DR.
DR is the leading cause of vision loss in working-age adults and the incidence is expected to continue to grow significantly with the prevalence of diabetes. Frequent anti-VEGF injections in the eye have been shown to reduce the risk of blindness in randomized controlled clinical trials and are approved for the treatment of wet AMD and DR.
Moreover, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy.
Moreover, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. 23 Table of Contents Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy.
The genetic material needs to be delivered efficiently and to the desired target 3 Table of Contents tissues and cell types, which will vary depending on the disease to be treated. Based on this need, scientists have designed and developed a variety of gene vectors in order to facilitate gene delivery in cells. We focus on in vivo gene therapy.
The genetic material needs to be delivered efficiently and to the desired target tissues and cell types, which will vary depending on the disease to be treated. Based on this need, scientists have designed and developed a variety of gene vectors in order to facilitate gene delivery in cells. We focus on in vivo gene therapy.
As part of our delivery device expertise, we have created teams of experts to support and train physicians to deliver AAV Therapeutics in operating room and physician office settings. In recent years, a tremendous amount of progress has been made in the development of AAV Therapeutics, and we believe we have been a leader in these advancements.
As part of our delivery device expertise, we have created teams of experts to support and train physicians to deliver AAV Therapeutics in operating room and physician office settings. 5 Table of Contents In recent years, a tremendous amount of progress has been made in the development of AAV Therapeutics, and we believe we have been a leader in these advancements.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA, including withdrawal of the product from the market.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. Discovery of 21 Table of Contents problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA, including withdrawal of the product from the market.
Adoption of government controls and 25 Table of Contents measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceuticals. U.S. Foreign Corrupt Practices Act The U.S. Foreign Corrupt Practices Act (FCPA), to which we are subject, prohibits corporations and individuals from engaging in bribery and corruption when dealing with foreign government officials.
Adoption of government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceuticals. U.S. Foreign Corrupt Practices Act The U.S. Foreign Corrupt Practices Act (FCPA), to which we are subject, prohibits corporations and individuals from engaging in bribery and corruption when dealing with foreign government officials.
GSK can terminate this license agreement if: • we are late in paying GSK any money due under the agreement and do not pay in full within a specified number of days of GSK’s written demand; 14 Table of Contents • we materially breach the agreement and fail to cure within a specified number of days; or • we file for bankruptcy.
GSK can terminate this license agreement if: • we are late in paying GSK any money due under the agreement and do not pay in full within a specified number of days of GSK’s written demand; • we materially breach the agreement and fail to cure within a specified number of days; or • we file for bankruptcy.
In accordance with Article 3 of Regulation (EC) No. 141/2000 of the European Parliament and of the Council of 16 December 1999 on orphan medicinal products, a medicinal product may be designated as an orphan medicinal product if (i) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (ii) either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the incentives derived from orphan medicinal product status, would not generate sufficient return in the EU to justify investment; and (iii) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition.
In accordance with Article 3 of Regulation (EC) No 141/2000 on orphan medicinal products, a medicinal product may be designated as an orphan medicinal product if (i) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (ii) either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the incentives derived from orphan medicinal product status, would not generate sufficient return in the EU to justify investment; and (iii) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition.
We entered into a license agreement with each of these NAV Technology Licensees upon their formation, for which we received equity in the NAV Technology Licensee in addition to other consideration. In November 2017, Ultragenyx Pharmaceutical Inc. (Ultragenyx) acquired Dimension for approximately $152 million in cash.
We entered into a license agreement with each of these NAV Technology Licensees upon their formation, for which we received equity in the NAV Technology Licensee in addition to other consideration. In November 2017, Ultragenyx Pharmaceutical Inc. (Ultragenyx) acquired Dimension for 10 Table of Contents approximately $152 million in cash.
Our Investigational AAV Therapeutics We are currently focusing our internal development pipeline in three areas: retinal diseases, neuromuscular diseases and neurodegenerative diseases. RGX‑314 for the Treatment of Wet AMD, DR and Other Chronic Retinal Diseases We are developing RGX‑314 in collaboration with AbbVie as a potential one-time treatment for wet AMD, DR and other chronic retinal diseases.
Our Investigational AAV Therapeutics We are currently focusing our internal development pipeline in three areas: retinal diseases, neuromuscular diseases and neurodegenerative diseases. ABBV-RGX‑314 for the Treatment of Wet AMD and DR We are developing ABBV-RGX‑314 in collaboration with AbbVie as a potential one-time treatment for wet AMD and DR.
The Directive is intended to establish rules for facilitating access to safe and high-quality cross-border healthcare in the EU. 27 Table of Contents Health Technology Assessment (HTA) of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in some EU Member States.
The Directive is intended to establish rules for facilitating access to safe and high-quality cross-border healthcare in the EU. Health Technology Assessment (HTA) of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in some EU Member States.
Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical studies must be conducted and monitored in accordance with the FDA’s regulations imposing the GCP requirements, including the requirement that all research subjects provide informed consent.
Each protocol and any amendments to the protocol must be submitted to the FDA as 17 Table of Contents part of the IND. Clinical studies must be conducted and monitored in accordance with the FDA’s regulations imposing the GCP requirements, including the requirement that all research subjects provide informed consent.
Food and Drug Administration (FDA) in 2019, and has been used to treat over 2,500 patients suffering from SMA, a debilitating and potentially deadly disease. Our partnering strategy provides us the flexibility to sublicense development of treatments designed to address significant unmet medical needs, while remaining focused on our own pipeline of AAV Therapeutics.
Food and Drug Administration (FDA) in 2019, and has been used to treat over 3,700 patients suffering from SMA, a debilitating and potentially deadly disease. Our partnering strategy provides us the flexibility to sublicense development of treatments designed to address significant unmet medical needs, while remaining focused on our own pipeline of AAV Therapeutics.
We believe that we are in material compliance with applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business. We cannot predict, however, how changes in these laws may affect our future operations. Equivalent laws have been adopted in other countries that impose similar obligations. Other U.S.
We believe that we are in material compliance with applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business. We cannot predict, however, how changes in these laws may affect our future operations. Equivalent laws have been adopted in other countries that impose similar obligations. 22 Table of Contents Other U.S.
The current standard-of-care anti-VEGF treatments require patients to receive injections in the eye every four to 12 weeks for the duration of the disease.
The current standard-of-care anti-VEGF treatments require patients to receive injections in the eye every four to 16 weeks for the duration of the disease.
It is impossible to predict whether legislative changes will be enacted, regulations, policies or guidance changed, or interpretations by agencies or courts changed, or what the impact of such changes, if any, may be. 18 Table of Contents U.S.
It is impossible to predict whether legislative changes will be enacted, regulations, policies or guidance changed, or interpretations by agencies or courts changed, or what the impact of such changes, if any, may be. U.S.
For other countries outside of the EU, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical studies, product licensing, pricing and reimbursement vary from country to country.
For other countries outside of the EU, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical studies, product licensing, 26 Table of Contents pricing and reimbursement vary from country to country.
Under the terms of the agreement, we are obligated to pay Minnesota upfront fees, annual maintenance fees, royalties on net sales, if any, sublicense fees and fees upon the achievement of various milestones. Emory University .
Under the terms of the agreement, we are obligated to pay Minnesota upfront fees, annual maintenance fees, royalties on net sales, if any, sublicense fees and fees upon the achievement of various milestones. 13 Table of Contents Emory University .
Two customers (AbbVie and Novartis Gene Therapies) accounted for approximately 99% of our total revenues for the year ended December 31, 2021. One customer (Novartis Gene Therapies) accounted for approximately 94% of our total revenues for the year ended December 31, 2020. We expect future license and royalty revenue to continue to be derived from a limited number of licensees.
Two customers (AbbVie and Novartis Gene Therapies) accounted for approximately 99% of our total revenues for the year ended December 31, 2021. We expect future license and royalty revenue to continue to be derived from a limited number of licensees.
Further guidance on such criteria is provided in European Commission Regulation (EC) No. 847/2000 of 27 April 2000 laying down the provisions for implementation of the criteria for designation of a medicinal product as an orphan medicinal product and definitions of the concepts “similar medicinal product” and “clinical superiority”.
Further guidance on such criteria is provided in Regulation (EC) No 847/2000 laying down the provisions for implementation of the criteria for designation of a medicinal product as an orphan medicinal product and definitions of the concepts “similar medicinal product” and “clinical superiority”.
Over 60 clinical trials utilizing NAV Vectors have been registered in the National Institutes of Health (NIH) clinical trials database since 2015, and one of three FDA-approved AAV Therapeutics in the United States uses a NAV Vector (Novartis’ Zolgensma).
Over 100 clinical trials utilizing NAV Vectors have been registered in the National Institutes of Health (NIH) clinical trials database since 2015, and one of five FDA-approved AAV Therapeutics in the United States uses a NAV Vector (Novartis’ Zolgensma).
Applications to the FDA are required before conducting clinical testing of biological products, and each clinical study protocol for a gene therapy product is reviewed by the FDA. Within the FDA, the Center for Biologics Evaluation and Research (CBER) regulates gene therapy products.
Applications to the FDA are required before conducting clinical testing of biological products, and each clinical study protocol for a gene therapy product is reviewed by the FDA. 16 Table of Contents Within the FDA, the Center for Biologics Evaluation and Research (CBER) regulates gene therapy products as biological products.
EU No. 536/2014), or CTR, which became applicable in January 2022 and stipulates the process of obtaining competent authority approval for clinical trials in the EU. Under the CTR, trial sponsors submit their application for approval via an EU Portal.
EU No. 536/2014), or CTR, which became applicable in January 2022 and established a centralized process of obtaining competent authority approval for clinical trials in the EU. Under the CTR, trial sponsors submit their application for approval via an EU Portal.
In addition, the enactment of the Inflation Reduction Act (IRA) in August 2022 includes significant changes to potential Medicare drug product reimbursement through government negotiation of certain drug prices, as well as manufacturer discount and inflation rebate obligations.
By way of example, the enactment of the Inflation Reduction Act (IRA) in August 2022 includes significant changes to potential Medicare drug product reimbursement through government negotiation of certain drug prices, as well as manufacturer discount and inflation rebate obligations.
Under the terms of the Penn license agreement, we issued equity to Penn and are also obligated to pay Penn: • up to $20.5 million upon the achievement of various development and sales-based milestones; • low- to mid-single digit royalties on net sales of licensed pharmaceutical products sold by us or our affiliates; • low-single digit to low-double digit royalty percentages of net sales on licensed products intended for research purposes only; 13 Table of Contents • low- to mid-double digit royalty percentage on royalties received from third parties on net sales of licensed pharmaceutical products by such third parties; • certain sublicense fees, of which $12 million remains outstanding; and • reimbursements for ongoing patent prosecution and maintenance expenses.
Under the terms of the Penn license agreement, we issued equity to Penn and are also obligated to pay Penn: • up to $20.5 million upon the achievement of various development and sales-based milestones; • low- to mid-single digit royalties on net sales of licensed pharmaceutical products sold by us or our affiliates; • low-single digit to low-double digit royalty percentages of net sales on licensed products intended for research purposes only; • low- to mid-double digit royalty percentage on royalties received from third parties on net sales of licensed pharmaceutical products by such third parties; • certain sublicense fees, of which $9 million remains outstanding as of December 31, 2023; and • reimbursements for ongoing patent prosecution and maintenance expenses.
Mild intraocular inflammation was reported at similar incidence in the first and second dose levels, with an increase in incidence in mild to moderate inflammation seen at the third dose level (Cohort 4). All intraocular inflammation resolved with topical corticosteroids.
Mild intraocular inflammation was reported at similar incidence rate in the first and second dose levels, with mild to moderate intraocular inflammation seen at the third dose level in Cohort 4 and 5. All intraocular inflammation resolved with topical corticosteroids.
We believe we have extensive human safety experience to support the development of our investigational AAV Therapeutics based on data from over 2,800 patients dosed with AAV Therapeutics derived from our NAV Technology Platform in more than 20 different clinical-stage programs and with one FDA approved product.
We believe we have extensive human safety experience to support the development of our investigational AAV Therapeutics based on data from over 4,500 patients dosed with AAV Therapeutics derived from our NAV Technology Platform in more than 15 different clinical-stage programs and with one FDA approved product.
The grant of marketing authorization in the EU for products containing viable human tissues or cells such as gene therapy medicinal products is governed by Regulation 1394/2007/EC on advanced therapy medicinal products, read in combination with Directive 2001/83/EC of the European Parliament and of the Council, commonly known as the Community code on medicinal products and Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004 laying down Community procedures for the authorization and supervision of medicinal products for human and veterinary use and establishing the EMA, commonly referred to as the EMA Regulation.
The grant of marketing authorization in the EU for products containing viable human tissues or cells such as gene therapy medicinal products is governed by Regulation (EC) No 1394/2007 on advanced therapy medicinal products, read in combination with Directive 2001/83/EC on the Community code relating to medicinal products for human use and Regulation (EC) No 726/2004 laying down Community procedures for the authorization and supervision of medicinal products for human and veterinary use and establishing the EMA.
In December 2020, we sold a portion of our royalty rights from the net sales of Zolgensma to entities managed by Healthcare Royalty Management, LLC (HCR) for a gross purchase price of $200 million. As of December 31, 2022, Zolgensma is approved in 47 countries and over 2,500 patients have been treated.
In December 2020, we sold a portion of our royalty rights from the net sales of Zolgensma to entities managed by Healthcare Royalty Management, LLC (HCR) for a gross purchase price of $200 million. As of December 31, 2023, Zolgensma is approved in 51 countries and over 3,700 patients have been treated.
Our NAV Technology Platform In 2009, we acquired exclusive rights to our NAV Technology Platform. Our NAV Technology Platform includes over 100 NAV Vectors, as well as vectors that are at least 95% identical to any NAV Vector, that provide the foundation for the development of new AAV Therapeutics.
Our NAV Technology Platform includes over 100 NAV Vectors, as well as vectors that are at least 95% identical to any NAV Vector, that provide the foundation for the development of new AAV Therapeutics.
We have received orphan drug product designation, rare pediatric disease designation and Fast Track designation from the FDA, as well as orphan designation and advanced therapy medicinal products (ATMP) classification from the European Medicines Agency (the EMA) for RGX‑121.
We have received orphan drug product designation, rare pediatric disease designation, regenerative medicine advanced therapy (RMAT) and Fast Track designation from the FDA, as well as orphan designation and advanced therapy medicinal products (ATMP) classification from the EMA for RGX‑121.
Our Investigational AAV Therapeutics As of December 31, 2022, in addition to the patents related to our NAV Technology Platform described above, our patent portfolio included a total of five issued U.S. patents, two issued European patents, five pending International Patent applications filed 15 Table of Contents pursuant to the Patent Cooperation Treaty (PCTs) and 22 PCTs that have entered national stage relating to our product candidates, which are described below: Retinal Diseases In addition to our NAV Technology Platform patents covering the NAV AAV8 vector and manufacture of NAV AAV8 vectors used in our retinal disease programs, our patent portfolio includes more recent filings relating to our clinical candidate vectors, clinical protocols, routes of administration to the eye (subretinal and suprachoroidal), formulations and target diseases treated by our gene therapy vectors. • RGX-314: Our patent portfolio supports our clinical development and our collaboration with AbbVie for the clinical development of RGX-314.
Our Investigational AAV Therapeutics As of December 31, 2023, in addition to the patents related to our NAV Technology Platform described above, our patent portfolio included a total of four issued U.S. patents, one issued European patent, two pending International Patent applications filed pursuant to the Patent Cooperation Treaty (PCTs) and 19 PCTs that have entered national stage relating to our product candidates, which are described below: Retinal Diseases In addition to our NAV Technology Platform patents covering the NAV AAV8 vector and manufacture of NAV AAV8 vectors used in our retinal disease programs, our patent portfolio includes more recent filings relating to our clinical candidate vectors, clinical protocols, routes of administration to the eye (subretinal and suprachoroidal), formulations and target diseases treated by our gene therapy vectors.
NAV Technology Platform As of December 31, 2022, our patent portfolio included 22 issued U.S. patents and six European patents relating to the AAV7, AAV8, AAV9 and AAVrh10 vectors and their uses. These patents have terms that will expire as late as 2026, not including patent term extensions.
NAV Technology Platform As of December 31, 2023, our patent portfolio included 24 issued U.S. patents and three European patents relating to the AAV7, AAV8, AAV9, AAVrh10 and AAVrh46 vectors and their uses. These patents have terms that will expire as late as 2027, not including patent term extensions.
To further enhance the profile of AAV Therapeutics, we have developed a platform of different devices to assist in the delivery of AAV Therapeutics using multiple routes of administration to tissues and cells.
We leverage the differentiated characteristics of NAV Vectors to target different tissues and cells. To further enhance the profile of AAV Therapeutics, we have developed a platform of different devices to assist in the delivery of AAV Therapeutics using multiple routes of administration to tissues and cells.
Our investigational AAV Therapeutics include: • RGX-314, which we are developing in collaboration with AbbVie to treat large patient populations impacted by wet age-related macular degeneration (wet AMD), diabetic retinopathy (DR) and other chronic retinal diseases characterized by loss of vision. • RGX-202, which we are developing to treat Duchenne muscular dystrophy (Duchenne), one of the most common fatal genetic disorders affecting children. • RGX-121, RGX-111 and RGX-181, which we are developing to treat Mucopolysaccharidosis type II (MPS II), Mucopolysaccharidosis type I (MPS I), and late infantile neuronal ceroid lipofuscinosis type II (CLN2 disease), all of which are progressive, neurodegenerative lysosomal storage disorders. • RGX-381, which we are developing to treat the ocular manifestations of CLN2 disease. 2 Table of Contents Our internal pipeline is shown below.
Our investigational AAV Therapeutics include: • ABBV-RGX-314, which we are developing in collaboration with AbbVie to treat large patient populations impacted by wet age-related macular degeneration (wet AMD), diabetic retinopathy (DR) and other chronic retinal diseases characterized by loss of vision. • RGX-202, which we are developing to treat Duchenne muscular dystrophy (Duchenne), one of the most common fatal genetic disorders affecting children. • RGX-121, which we are developing to treat Mucopolysaccharidosis type II (MPS II), a progressive, neurodegenerative lysosomal storage disorder. 2 Table of Contents Our internal pipeline is shown below.
We also sublicense our NAV Technology Platform to third parties in order to develop and bring to market AAV Therapeutics for a range of severe diseases with significant unmet medical needs outside of our core disease indications and therapeutic areas. The Trustees of the University of Pennsylvania.
We currently use our NAV Technology Platform to develop treatments in the areas of retinal, neuromuscular and neurodegenerative diseases. We also sublicense our NAV Technology Platform to third parties in order to develop and bring to market AAV Therapeutics for a range of severe diseases with significant unmet medical needs outside of our core disease indications and therapeutic areas.
The approvals will still need to be granted by the competent authorities of the EU Member States where a trial takes place; however, the procedure for approval will be conducted in a coordinated manner among the concerned EU Member States as provided under the CTR.
The approvals are still granted by the competent authorities of each EU Member State where the trial takes place; however, the procedure for approval is conducted in a coordinated manner among the concerned EU Member States as provided under the CTR.
Our patent portfolio relating to RGX-381 includes three PCTs that have entered national stage for which any issued U.S. or European patent would expire in 2038, 2039 or 2040, and one pending PCT for which any issued U.S. or European patents would expire in 2041, in each case without taking into account any possible patent term adjustment or extension.
Our patent portfolio relating to RGX-121 includes one issued U.S. patent that will expire in 2038, one issued U.S. patent that will expire in 2039 and one issued U.S. patent that will expire in 2040, one issued European patent that will expire in 2036 and nine PCTs that have entered national stage for which any issued U.S. or European patents would expire in 2034, 2036, 2037, 2038, 2041 or 2042, in each case without taking into account any possible patent term adjustment or extension.
The FDA will seek to ensure the sponsor of a breakthrough therapy product receives timely advice and interactive communications to help the sponsor design and conduct a development program as efficiently as possible.
Products with a Breakthrough Therapy designation are eligible for the benefits of Breakthrough Therapy, and the FDA will seek to ensure the sponsor of a breakthrough therapy product receives timely advice and interactive communications to help the sponsor design and conduct a development program as efficiently as possible.
Companies with products in development for the treatment of wet AMD include, but may not be limited to, Adverum, Kodiak Sciences, Inc., Opthea, Outlook Therapeutics, Inc. and 4D Molecular Therapeutics. • DR. Currently marketed anti-VEGF competition for DR with DME include Roche/Genentech (Lucentis, Vabysmo), Regeneron (Eylea) and Coherus Biosciences (Cimerli).
Currently marketed anti-VEGF competition for DR with DME include Novartis (Beovu), Roche/Genentech (Lucentis, Vabysmo), Regeneron (Eylea, Eylea HD), and Coherus Biosciences (Cimerli). Companies with products in development for the treatment of DR with DME include, but may not be limited to, 4D Molecular Therapeutics, Eyepoint, Kodiak Sciences, Oculis, and Roche.
Platform License Agreements and Other Licenses Platform Licenses We have exclusively licensed many of our rights in our NAV Technology Platform from the University of Pennsylvania (Penn) and GlaxoSmithKline LLC (GSK), which together we refer to as our Platform Licenses.
Novartis reported worldwide sales of Zolgensma of $1.21 billion in 2023. Platform License Agreements and Other Licenses Platform Licenses We have exclusively licensed many of our rights in our NAV Technology Platform from the University of Pennsylvania (Penn) and GlaxoSmithKline LLC (GSK), which together we refer to as our Platform Licenses.
Innovative medicinal products are authorized in the EU on the basis of a full marketing authorization application (as opposed to an application for marketing authorization that relies, in whole or in part, on data in the marketing authorization dossier for another, previously approved medicinal product).
The European Commission grants or refuses marketing authorization after the EMA has delivered its opinion. Innovative medicinal products are authorized in the EU on the basis of a full marketing authorization application (as opposed to an application for marketing authorization that relies, in whole or in part, on data in the marketing authorization dossier for another, previously approved medicinal product).
Human Capital Resources As of February 23, 2023, we employed 401 full-time employees, of which 322 were engaged in research and development activities, including preclinical, manufacturing and clinical study related functions, and 79 were engaged in general administrative activities, including commercial, corporate development, finance, legal, human resources, information technology, facilities and other general and administrative functions.
Human Capital Resources As of February 22, 2024, we employed 344 full-time employees, of which 277 were engaged in research and development activities, including preclinical, clinical and manufacturing related functions, and 67 were engaged in general administrative activities, including commercial, corporate development, finance, legal, human resources, information technology, facilities and other general and administrative functions.
You also may view and download copies of our SEC filings free of charge at our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
You may obtain any reports, proxy and information statements, and other information that we file electronically with the SEC at www.sec.gov. You also may view and download copies of our SEC filings free of charge at our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Companies with products in development for the treatment of DR with DME include, but may not be limited to, Kodiak Sciences, Novartis, Opthea and Roche. The principal marketed anti-VEGF competition for DR without DME is Roche/Genentech (Lucentis) and Regeneron (Eylea).
The principal marketed anti-VEGF competition for DR without DME is Roche/Genentech (Lucentis) and Regeneron (Eylea, Eylea HD). Companies with products in development for the treatment of DR without DME include, but may not be limited to, Eyepoint Pharmaceuticals, Kodiak Sciences, Novartis, Ocular Therapeutix, Ocuphire Pharma, OcuTerra Therapeutics, and Roche. • DMD.
In the future, we may apply for restoration of patent term for one of our currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical studies and other factors involved in the filing of the relevant BLA. 23 Table of Contents A biological product can obtain pediatric market exclusivity in the United States.
In the future, we may apply for restoration of patent term for one of our currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical studies and other factors involved in the filing of the relevant BLA.
HS is a key biomarker of I2S enzyme activity and high amounts of HS accumulate in the central nervous system (CNS) of MPS II patients, which has been shown to correlate with neurocognitive manifestations of the disease.
These polysaccharides, called glycosaminoglycans (GAGs), accumulate in tissues of MPS II patients, resulting in diverse clinical signs and symptoms. HS is a key biomarker of I2S enzyme activity and high amounts of HS accumulate in the central nervous system (CNS) of MPS II patients, which has been shown to correlate with neurocognitive manifestations of the disease.
Pediatric exclusivity, if granted in the case of a biologic approved under a BLA, adds six months to existing exclusivity periods. This six-month exclusivity, which runs from the end of other exclusivity protection, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.
This six-month exclusivity, which runs from the end of other exclusivity protection, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.
In February 2009, we entered into an exclusive, worldwide license agreement with Penn for patent and other intellectual property rights relating to a gene therapy technology platform based on AAVs discovered at Penn in the laboratory of James M. Wilson, M.D., Ph.D. This license was amended in September 2014, April 2016, April 2019, September 2020 and March 2022.
The Trustees of the University of Pennsylvania. In February 2009, we entered into an exclusive, worldwide license agreement with Penn for patent and other intellectual property rights relating to a gene therapy technology platform based on AAVs discovered at Penn in the laboratory of James M. Wilson, M.D., Ph.D.
Our patent portfolio covers the use of RGX-314 for the treatment of wet AMD through subretinal or suprachoroidal administration and for the treatment of DR through suprachoroidal administration; it also covers formulations and devices used for suprachoroidal administration.
Our patent portfolio relating to ABBV-RGX-314 supports our clinical development and our collaboration with AbbVie for the clinical development of ABBV-RGX-314. Our patent portfolio covers the use of ABBV-RGX-314 for the treatment of wet AMD through subretinal or suprachoroidal administration and for the treatment of DR through suprachoroidal administration; it also covers formulations and devices used for suprachoroidal administration.
As of January 1, 2021, the UK is a “third country” with respect to the EU (subject to the terms of the EU UK Trade Agreement), and EU law ceased to apply directly in the UK. However, the UK has retained the EU regulatory regime with certain modifications as standalone UK legislation.
As of January 1, 2021, the UK is a “third country” with respect to the EU (subject to the terms of the EU UK Trade Agreement), and EU law ceased to apply directly in the UK.
Our AAV Therapeutic Platform Discovery and Development of AAV Therapeutics We have a team of scientists and engineers dedicated to expanding the understanding and applications of AAV vectors, applying the differentiated capabilities of the NAV Technology Platform and exploring the potential to generate new, innovative AAV Therapeutics.
To date, we have observed that AAV Therapeutics derived from our NAV Technology Platform have been generally well tolerated. 3 Table of Contents Our AAV Therapeutic Platform Discovery and Development of AAV Therapeutics We have a team of scientists and engineers dedicated to expanding the understanding and applications of AAV vectors, applying the differentiated capabilities of the NAV Technology Platform and exploring the potential to generate new, innovative AAV Therapeutics.
We are also evaluating the efficacy, safety and tolerability of suprachoroidal delivery of RGX-314 through AAVIATE ® , a multi-center, open label, randomized, controlled, dose-escalation Phase II trial of RGX-314 for the treatment of wet AMD. In October 2022, we announced additional positive interim data from AAVIATE.
Clinical Development of ABBV-RGX‑314 Suprachoroidal Delivery for the Treatment of Wet AMD We are also evaluating the efficacy, safety and tolerability of suprachoroidal delivery of ABBV-RGX-314 through AAVIATE ® , a multi-center, open label, randomized, controlled, dose-escalation Phase II trial of ABBV-RGX-314 for the treatment of wet AMD.
Our competitors may be more successful than us in obtaining approval for treatments and achieving widespread market acceptance. Our competitors’ treatments may be more effective, or more effectively marketed and sold, than any treatment we may commercialize and may render our treatments obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our treatments.
Our competitors’ treatments may be more effective, or more effectively marketed and sold, than any treatment we may commercialize and may render our treatments obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our treatments.
A new Regulation on HTA on EU level was adopted in December 2021: Regulation (EU) 2021/2282 of the European Parliament and of the Council of 15 December 2021 on health technology assessment and amending Directive 2011/24/EU (the HTA Regulation). The HTA Regulation covers new medicines and certain new medical devices.
A new Regulation on HTA on EU level was adopted in December 2021: Regulation (EU) 2021/2282 on health technology assessment (the HTA Regulation). The HTA Regulation covers new medicines and certain new medical devices.
The biological product is initially introduced into healthy human subjects and tested for safety. However, in the case of some products for rare, severe or life-threatening diseases, the initial human testing is often conducted in patients. • Phase II.
Human clinical studies are typically conducted in three sequential phases that may overlap or be combined: • Phase I. The biological product is initially introduced into healthy human subjects and tested for safety. However, in the case of some products for rare, severe or life-threatening diseases, the initial human testing is often conducted in patients. • Phase II.
Penn has the right to terminate: • with notice if we are late in paying money due under the license agreement; • with notice if we fail to achieve a diligence event on or before the applicable completion date or otherwise breach the license agreement; • if we or our affiliates experience insolvency; or • if we commence any action against Penn to declare or render any claim of the licensed patent rights invalid or unenforceable.
Penn has the right to terminate: • with notice if we are late in paying money due under the license agreement; • with notice if we fail to achieve a diligence event on or before the applicable completion date or otherwise breach the license agreement; • if we or our affiliates experience insolvency; or • if we commence any action against Penn to declare or render any claim of the licensed patent rights invalid or unenforceable. 12 Table of Contents Under the 2014 SRA, as amended, we funded research at Penn, paid certain intellectual property legal and filing expenses and received the rights to certain research results.
We have developed a broad pipeline of investigational AAV Therapeutics using our NAV Technology Platform as a one-time treatment to address an array of diseases. We are currently focusing our internal development pipeline in three areas: retinal, neuromuscular and neurodegenerative diseases.
We have developed a broad pipeline of investigational AAV Therapeutics using our NAV Technology Platform as a one-time treatment to address an array of diseases. We are currently focusing our internal development pipeline in three areas: retinal, neuromuscular and neurodegenerative diseases. We believe these product candidates are differentiated, can be expedited, and support meaningful near-term and long-term value generation.
Not only must we compete with other companies that are focused on gene therapy products using earlier generation AAV technology and other gene therapy platforms, but any products that we may commercialize will have to compete with existing therapies and new therapies that may become available in the future.
Not only must we compete with other companies that are focused on gene therapy products using earlier generation AAV technology and other gene therapy platforms, but any products that we may commercialize will have to compete with existing therapies and new therapies that may become available in the future. 15 Table of Contents There are other organizations working to improve existing therapies or to develop new therapies for our initially selected disease indications.
AAV Therapeutics Historically, the primary challenge for gene therapy has been the safe and effective delivery of genes into cells. Genes are made of DNA, which is a large, highly charged molecule that is difficult to transport across a cell membrane and deliver to the nucleus, where it can be transcribed and translated into protein.
Genes are made of DNA, which is a large, highly charged molecule that is difficult to transport across a cell membrane and deliver to the nucleus, where it can be transcribed and translated into protein.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Our Intellectual Property • Our intellectual property rights may be limited by the terms and conditions of licenses granted to us by others. • We must obtain and maintain patent protection for our products and technology to protect our intellectual property rights. • Our intellectual property licenses with third parties may be subject to disagreements. • We are required to comply with the agreements under which we license intellectual property rights from third parties. • We may not be successful in obtaining necessary rights to our product candidates through acquisitions and in-licenses. • We may not be able to protect our intellectual property rights in the United States and throughout the world. • Issued patents covering our NAV Technology Platform or our product candidates could be found invalid or unenforceable. • Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights. • We may be subject to intellectual property claims. • Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products. • We may be unable to obtain patent term extension and data exclusivity for our product candidates.
Biggest changeRisks Related to Our Intellectual Property • Our intellectual property rights may be limited by the terms and conditions of licenses granted to us by others. • We must obtain and maintain patent protection for our products and technology to protect our intellectual property rights. • Our intellectual property licenses with third parties may be subject to disagreements. • We are required to comply with the agreements under which we license intellectual property rights from third parties. • We may not be successful in obtaining necessary rights to our product candidates through acquisitions and in-licenses. • We may not be able to protect our intellectual property rights in the United States and throughout the world. • Issued patents covering our NAV Technology Platform or our product candidates could be found invalid or unenforceable. • Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights. • We may be subject to intellectual property claims. • Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products. • We may be unable to obtain patent term extension and data exclusivity for our product candidates. 30 Table of Contents Risks Related to Ownership of Our Common Stock • Our operating results are difficult to predict and could cause the price of our common stock to fluctuate substantially. • Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights. • Future acquisitions or strategic partnerships may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities and subject us to other risks. • Provisions in our certificate of incorporation and bylaws might discourage, delay or prevent a change in control. • Our certificate of incorporation includes exclusive forum clauses for certain litigation. • Our business could be negatively affected as a result of the actions of activist stockholders.
PPACA provides and recent government cases against pharmaceutical and medical device manufacturers support the view that federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, may implicate the False Claims Act; • HIPAA, which created new federal criminal statutes that prohibit a person from knowingly and willfully executing a scheme or from making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor (e.g., public or private); • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), and its implementing regulations, and as amended again by the final HIPAA omnibus rule, Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under HITECH and the Genetic Information Nondiscrimination Act; • Other Modifications to HIPAA, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization by entities subject to the rule, such as health plans, health care clearinghouses and health care providers; • federal transparency laws, including the federal Physician Payment Sunshine Act, that require disclosure of payments and other transfers of value provided to physicians and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; 51 Table of Contents • national laws, industry codes and professional codes of conduct applicable to certain European Union Member States which require payments made to physicians to be publicly disclosed and agreements with physicians to often be the subject of prior notification and approval by the physicians’ employer, his or her competent professional organization and/or the regulatory authorities of the individual Member States; • federal, state and foreign laws relating to the processing, storage and transfer of personal data, including, but not limited to, the California Consumer Privacy Act and the European Union’s General Data Protection Regulation, which may require us to incur substantial costs or change our business practices with respect to the treatment of personal data; and • state and foreign law equivalents of each of the above federal laws, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specific disease states.
PPACA provides and recent government cases against pharmaceutical and medical device manufacturers support the view that federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, may implicate the False Claims Act; • HIPAA, which created new federal criminal statutes that prohibit a person from knowingly and willfully executing a scheme or from making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor (e.g., public or private); • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), and its implementing regulations, and as amended again by the final HIPAA omnibus rule, Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under HITECH and the Genetic Information Nondiscrimination Act; • Other Modifications to HIPAA, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization by entities subject to the rule, such as health plans, health care clearinghouses and health care providers; • federal transparency laws, including the federal Physician Payment Sunshine Act, that require disclosure of payments and other transfers of value provided to physicians and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; 50 Table of Contents • national laws, industry codes and professional codes of conduct applicable to certain European Union Member States which require payments made to physicians to be publicly disclosed and agreements with physicians to often be the subject of prior notification and approval by the physicians’ employer, his or her competent professional organization and/or the regulatory authorities of the individual Member States; • federal, state and foreign laws relating to the processing, storage and transfer of personal data, including, but not limited to, the California Consumer Privacy Act and the European Union’s General Data Protection Regulation, which may require us to incur substantial costs or change our business practices with respect to the treatment of personal data; and • state and foreign law equivalents of each of the above federal laws, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specific disease states.
Additionally, if the results of our planned clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates, we may: • be delayed in obtaining marketing approval for our product candidates, if at all; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; • be subject to changes in the way the product is administered; • be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing or other requirements; • have regulatory authorities withdraw, vary or suspend their approval of the product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation; • be subject to the addition of labeling statements, such as warnings or contraindications; • be sued; or • experience damage to our reputation.
If the results of our planned clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates, we may: • be delayed in obtaining marketing approval for our product candidates, if at all; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; • be subject to changes in the way the product is administered; • be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing or other requirements; • have regulatory authorities withdraw, vary or suspend their approval of the product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation; • be subject to the addition of labeling statements, such as warnings or contraindications; • be sued; or • experience damage to our reputation.
Any current or future licensing agreements or future collaborations we enter into may pose additional risks, including the following: • subjects in clinical trials undertaken by our licensees and collaborators may suffer adverse effects, including death; • our licensees and collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the licensees’ or collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities; • we may not have access to, or may be restricted from disclosing, certain information regarding product candidates being developed or commercialized under a collaboration and, consequently, may have limited ability to inform our stockholders about the status of such product candidates; • our licensees or collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the licensees or collaborators 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 may be viewed by our licensees or collaborators as competitive with their own product candidates or products, which may cause licensees or collaborators to cease to devote resources to the commercialization of our product candidates; 42 Table of Contents • a licensee or collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of any such product candidate; • our licensees or collaborators may breach their reporting, payment, intellectual property or other obligations to us, which could prevent us from complying with our contractual obligations to GSK and Penn; • disagreements with licensees or collaborators, including disagreements over intellectual property and other proprietary rights, payment obligations, 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 for us with respect to such product candidates or may result in litigation or arbitration, any of which would be time-consuming and expensive and could potentially lessen the value of such agreements and collaborations; • our licensees or collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; • disputes may arise with respect to the ownership of our other rights to intellectual property developed pursuant to our licensing agreements or collaborations; • our licensees or collaborators may infringe or otherwise violate the intellectual property rights of third parties, which may expose us to litigation and potential liability; and • licensing agreements or collaborations may be terminated for the convenience of the licensee or collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
Any current or future licensing agreements or future collaborations we enter into may pose additional risks, including the following: • subjects in clinical trials undertaken by our licensees and collaborators may suffer adverse effects, including death; • our licensees and collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the licensees’ or collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities; • we may not have access to, or may be restricted from disclosing, certain information regarding product candidates being developed or commercialized under a collaboration and, consequently, may have limited ability to inform our stockholders about the status of such product candidates; • our licensees or collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the licensees or collaborators 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 may be viewed by our licensees or collaborators as competitive with their own product candidates or products, which may cause licensees or collaborators to cease to devote resources to the commercialization of our product candidates; • a licensee or collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of any such product candidate; • our licensees or collaborators may breach their reporting, payment, intellectual property or other obligations to us, which could prevent us from complying with our contractual obligations to GSK and Penn; • disagreements with licensees or collaborators, including disagreements over intellectual property and other proprietary rights, payment obligations, 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 for us with respect to such product candidates or may result in litigation or arbitration, any of which would be time-consuming and expensive and could potentially lessen the value of such agreements and collaborations; • our licensees or collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; • disputes may arise with respect to the ownership of our other rights to intellectual property developed pursuant to our licensing agreements or collaborations; • our licensees or collaborators may infringe or otherwise violate the intellectual property rights of third parties, which may expose us to litigation and potential liability; and • licensing agreements or collaborations may be terminated for the convenience of the licensee or collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
Events that may prevent successful or timely commencement and completion of preclinical and clinical development include: • delays in reaching a consensus with regulatory authorities on trial design; • delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites; • delays in opening clinical trial sites or obtaining required institutional review board or independent Ethics Committee approval at each clinical trial site; • delays in recruiting and enrolling suitable subjects to participate in our clinical trials, due to factors such as the size of the subject population, process for identifying subjects, design of protocols, eligibility and exclusive criteria, perceived risks and benefits of the relevant product candidate or gene therapy generally, availability of competing therapies and trials, 34 Table of Contents severity of the disease under investigation, need and length of time required to discontinue other potential therapies, availability of genetic testing, availability and proximity of trial sites for prospective subjects, ability to obtain subject consent and referral practices of physicians; • imposition of a clinical hold by regulatory authorities, including as a result of a serious adverse event or after an inspection of our clinical trial operations or trial sites; • failure by us, any CROs we engage or any other third parties to adhere to clinical trial requirements; • failure to perform in accordance with GCP, or applicable regulatory guidelines in the European Union and other countries; • 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; • delays in having subjects complete participation in a trial or return for post-treatment follow-up; • clinical trial sites or subjects dropping out of a trial; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • 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; or • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.
Events that may prevent successful or timely commencement and completion of preclinical and clinical development include: • delays in reaching a consensus with regulatory authorities on trial design; • delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites; • delays in opening clinical trial sites or obtaining required institutional review board or independent Ethics Committee approval at each clinical trial site; • delays in recruiting and enrolling suitable subjects to participate in our clinical trials, due to factors such as the size of the trial or subject population, process for identifying subjects, design or expansion of protocols, eligibility and exclusive criteria, perceived risks and benefits of the relevant product candidate or gene therapy generally, availability of competing therapies and trials, severity of the disease under investigation, need and length of time required to discontinue other potential therapies, availability of genetic testing, availability and proximity of trial sites for prospective subjects, ability to obtain subject consent and referral practices of physicians; 33 Table of Contents • imposition of a clinical hold by regulatory authorities, including as a result of a serious adverse event or after an inspection of our clinical trial operations or trial sites; • failure by us, any CROs we engage or any other third parties to adhere to clinical trial requirements; • failure to perform in accordance with GCP, or applicable regulatory guidelines in the European Union and other countries; • 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; • delays in having subjects complete participation in a trial or return for post-treatment follow-up; • clinical trial sites or subjects dropping out of a trial; • selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data; • 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; or • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.
Our ability to generate future revenues from sales of our product candidates and in connection with sales of our licensees’ and collaborators’ products depends heavily on our, and our licensees’ and collaborators’, success in: • completing research studies and preclinical and clinical development of product candidates and identifying new gene therapy product candidates; • obtaining regulatory and marketing approvals for product candidates for which clinical trials are completed; • commercializing product candidates for which regulatory and marketing approval is obtained by establishing a sales force, marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner; • negotiating favorable terms in any collaboration, licensing or other arrangements into which we or our licensees and collaborators may enter and performing our obligations in such collaborations; • qualifying for adequate coverage and reimbursement by government and third-party payors for product candidates; • 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 can provide adequate, in both amount and quality, products and services to support clinical development and the market demand for product candidates, if approved; • obtaining market acceptance of product candidates as a viable treatment option; • competing effectively when other companies may develop products that are priced lower, reimbursed more favorably by government or other third-party payors, safer, more effective or more convenient to use than our products, if any, or our licensees’ and collaborators’ products; • implementing additional internal systems and infrastructure, as needed; • negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter and performing our obligations in such collaborations; • maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; • avoiding and defending against third-party interference, infringement and other intellectual property related claims; and • attracting, hiring and retaining qualified personnel.
Our ability to generate future revenues from sales of our product candidates and in connection with sales of our licensees’ and collaborators’ products depends heavily on our, and our licensees’ and collaborators’, success in: • completing research studies and preclinical and clinical development of product candidates and identifying new gene therapy product candidates; • obtaining regulatory and marketing approvals for product candidates for which clinical trials are completed; • commercializing product candidates for which regulatory and marketing approval is obtained by establishing a sales force, marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner; • negotiating favorable terms in any collaboration, licensing or other arrangements into which we or our licensees and collaborators may enter and performing our obligations in such collaborations; • qualifying for adequate coverage and reimbursement by government and third-party payors for product candidates; • 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 can provide adequate, in both amount and quality, products and services to support clinical development and the market demand for product candidates, if approved; 39 Table of Contents • obtaining market acceptance of product candidates as a viable treatment option; • competing effectively when other companies may develop products that are priced lower, reimbursed more favorably by government or other third-party payors, safer, more effective or more convenient to use than our products, if any, or our licensees’ and collaborators’ products; • implementing additional internal systems and infrastructure, as needed; • negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter and performing our obligations in such collaborations; • maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; • avoiding and defending against third-party interference, infringement and other intellectual property related claims; and • attracting, hiring and retaining qualified personnel.
Any potential acquisition or strategic partnership may entail numerous risks, including: • increased operating expenses and cash requirements; • the assumption of additional indebtedness or contingent liabilities; • the issuance of our equity securities; • assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; • the diversion of our management's attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition; • retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key business relationships; • risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and regulatory approvals; and 61 Table of Contents • our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.
Any potential acquisition or strategic partnership may entail numerous risks, including: • increased operating expenses and cash requirements; 60 Table of Contents • the assumption of additional indebtedness or contingent liabilities; • the issuance of our equity securities; • assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; • the diversion of our management's attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition; • retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key business relationships; • risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and regulatory approvals; and • our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.
Under our AbbVie Collaboration and License Agreement, we will have limited influence and control over the RGX-314 development and commercialization activities of AbbVie in markets outside the United States, and future revenues in connection with sales of licensed products under such agreement may be precluded or limited by any of these factors.
Under our AbbVie Collaboration and License Agreement, we will have limited influence and control over the ABBV-RGX-314 development and commercialization activities of AbbVie in markets outside the United States, and future revenues in connection with sales of licensed products under such agreement may be precluded or limited by any of these factors.
Proxy contests have been waged against many companies in the biopharmaceutical industry over the last several years, and proxy advisory firms may recommend changes to our business operations, provisions in our restated certificate of incorporation or amended and restated bylaws, or the composition of our board of directors or its committees.
Proxy contests have been waged against many companies in the biopharmaceutical industry over the last several years, and proxy advisory firms or investors may recommend changes to our business operations, provisions in our restated certificate of incorporation or amended and restated bylaws, or the composition of our board of directors or its committees.
Our net income or loss and other operating results may be affected by numerous factors, including: • any variations in the level of expenses related to our NAV Technology Platform, lead product candidates or future product candidates and technologies; • the addition or termination of any clinical trials and the timing and outcomes of clinical trials; • any regulatory or clinical developments affecting our lead product candidates, any future product candidates or our licensees’ product candidates; 60 Table of Contents • our execution of any collaborative, licensing or similar arrangements and the timing of any payments we may make or receive under these arrangements; • changes in the competitive landscape of our industry, including consolidation among our competitors or partners; • the nature and terms of any stock-based compensation grants; • any intellectual property infringement lawsuits in which we may become involved; • our ability to adequately support future growth; • potential unforeseen business disruptions that increase our costs or expenses; • future accounting pronouncements or changes in our accounting policies; and • the changing and volatile global economic environment.
Our net income or loss and other operating results may be affected by numerous factors, including: • any variations in the level of expenses related to our NAV Technology Platform, lead product candidates or future product candidates and technologies; • the addition or termination of any clinical trials and the timing and outcomes of clinical trials; • any regulatory or clinical developments affecting our lead product candidates, any future product candidates or our licensees’ product candidates; • our execution of any collaborative, licensing or similar arrangements and the timing of any payments we may make or receive under these arrangements; • changes in the competitive landscape of our industry, including consolidation among our competitors or partners; • the nature and terms of any stock-based compensation grants; • any intellectual property infringement lawsuits in which we may become involved; • our ability to adequately support future growth; • potential unforeseen business disruptions that increase our costs or expenses; • future accounting pronouncements or changes in our accounting policies; and • the changing and volatile global economic environment.
We may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our research, development and growth goals. 50 Table of Contents If our employees, principal investigators, consultants or commercial partners engage in misconduct, or if we are unable to comply with federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws or other applicable laws or regulations, then we could face substantial penalties.
We may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our research, development and growth goals. 49 Table of Contents If our employees, principal investigators, consultants or commercial partners engage in misconduct, or if we are unable to comply with federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws or other applicable laws or regulations, then we could face substantial penalties.
For example, under our AbbVie Collaboration and License Agreement, we will have limited influence and control over the RGX-314 development and commercialization activities of AbbVie in markets outside the United States.
For example, under our AbbVie Collaboration and License Agreement, we will have limited influence and control over the ABBV-RGX-314 development and commercialization activities of AbbVie in markets outside the United States.
As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. 55 Table of Contents Our intellectual property licenses with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology, increase our financial or other obligations to our licensors or other parties, or decrease financial or other obligations of our licensees and collaborators.
As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. 54 Table of Contents Our intellectual property licenses with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology, increase our financial or other obligations to our licensors or other parties, or decrease financial or other obligations of our licensees and collaborators.
We anticipate that our expenses will increase substantially if, and as, we: • continue our research studies and preclinical and clinical development of our product candidates, including our lead product candidates; • initiate additional preclinical studies and clinical trials for our lead product candidates and future product candidates, if any; • initiate additional activities relating to manufacturing, including building out additional laboratory and manufacturing capacity; • seek to identify additional product candidates; • prepare our BLA and MAA for our lead product candidates and seek marketing approvals for any of our other product candidates that successfully complete clinical trials, if any; • further develop our NAV Technology Platform; • establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval, if any; • maintain, expand and protect our intellectual property portfolio and enforce our intellectual property rights; and • acquire or in-license other product candidates and technologies.
We anticipate that our expenses will increase substantially if, and as, we: • continue our research studies and preclinical and clinical development of our product candidates, including our lead product candidates; 37 Table of Contents • initiate additional preclinical studies and clinical trials for our lead product candidates and future product candidates, if any; • initiate additional activities relating to manufacturing, including building out additional laboratory and manufacturing capacity; • seek to identify additional product candidates; • prepare our BLA and MAA for our lead product candidates and seek marketing approvals for any of our other product candidates that successfully complete clinical trials, if any; • further develop our NAV Technology Platform; • establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval, if any; • maintain, expand and protect our intellectual property portfolio and enforce our intellectual property rights; and • acquire or in-license other product candidates and technologies.
Risks Related to Manufacturing • Products intended for use in gene therapies are novel, complex and difficult to manufacture. 30 Table of Contents • Delays in obtaining regulatory approval of our manufacturing process or disruptions in our manufacturing process may delay or disrupt our commercialization efforts. • Third parties we rely upon to conduct our product manufacturing may not perform satisfactorily. • We are required to comply with ongoing manufacturing regulatory requirements.
Risks Related to Manufacturing • Products intended for use in gene therapies are novel, complex and difficult to manufacture. 29 Table of Contents • Delays in obtaining regulatory approval of our manufacturing process or disruptions in our manufacturing process may delay or disrupt our commercialization efforts. • Third parties we rely upon to conduct our product manufacturing may not perform satisfactorily. • We are required to comply with ongoing manufacturing regulatory requirements.
We, our development partners, including our licensees and collaborators, and our third-party manufacturers and suppliers are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the 52 Table of Contents generation, handling, use, storage, treatment, manufacture, transportation and disposal of, and exposure to, hazardous materials and wastes, as well as laws and regulations relating to occupational health and safety.
We, our development partners, including our licensees and collaborators, and our third-party manufacturers and suppliers are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the 51 Table of Contents generation, handling, use, storage, treatment, manufacture, transportation and disposal of, and exposure to, hazardous materials and wastes, as well as laws and regulations relating to occupational health and safety.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates. 56 Table of Contents We may not be successful in obtaining necessary rights to our product candidates through acquisitions and in-licenses.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates. 55 Table of Contents We may not be successful in obtaining necessary rights to our product candidates through acquisitions and in-licenses.
Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate product revenue, and our business, financial condition, results of operations and prospects would be materially harmed. 32 Table of Contents Our business depends substantially on the success of our lead product candidates.
Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate product revenue, and our business, financial condition, results of operations and prospects would be materially harmed. 31 Table of Contents Our business depends substantially on the success of our lead product candidates.
Gene therapy is still a relatively new approach to disease treatment and additional adverse side 35 Table of Contents effects could develop. There also is the potential risk of delayed adverse events following exposure to gene therapy products due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material.
Gene therapy is still a relatively new approach to disease treatment and additional adverse side 34 Table of Contents effects could develop. There also is the potential risk of delayed adverse events following exposure to gene therapy products due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material.
The Medicare and Medicaid programs increasingly are used as models for how private payors and government payors develop their coverage and reimbursement policies.
The Medicare and Medicaid programs increasingly are used as models for how private payors and other government payors develop their coverage and reimbursement policies.
For example, the IRA permits HHS to engage in price-capped negotiation to set the price of certain drugs and biologics reimbursed under Medicare Part B and Part D. The IRA contains statutory exclusions to the negotiation program, including for certain orphan designated drugs for which the only approved indication is for the orphan disease or condition.
For example, the IRA enacted in 2022, permits HHS to engage in price-capped negotiation to set the price of certain drugs and biologics reimbursed under Medicare Part B and Part D. The IRA contains statutory exclusions to the negotiation program, including for certain orphan designated drugs for which the only approved indication is for the orphan disease or condition.
If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate certain of our licensing activities, our research and development programs or other operations. Our operations have consumed significant amounts of cash since inception.
If we are unable to raise capital when needed or on favorable terms, we could be forced to delay, reduce or eliminate certain of our licensing activities, our research and development programs or other operations. Our operations have consumed significant amounts of cash since inception.
For example, any academic institution that we collaborate with, or may collaborate with in the future, will sometimes be granted rights to publish data arising out of such collaboration, provided that we are notified in advance and given the opportunity to delay publication for a limited time period in order for us to secure patent protection of intellectual property rights arising from the collaboration, in addition to the opportunity to remove confidential or trade secret information from any such publication.
For example, any academic institution that we collaborate with, or may collaborate with in the future, will sometimes be granted rights to publish data arising out of such collaboration, provided that we are notified in advance and given the opportunity to delay publication 42 Table of Contents for a limited time period in order for us to secure patent protection of intellectual property rights arising from the collaboration, in addition to the opportunity to remove confidential or trade secret information from any such publication.
It is difficult to predict what the CMS, the agency responsible for administering the Medicare program, will decide with respect to coverage and reimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these types of products.
It is difficult to predict what the CMS, the agency responsible for administering the Medicare program, will decide with respect to coverage and reimbursement for fundamentally novel products such as ours, as there is little body of established practices and precedents for these types of products.
The FDA has articulated a policy position that, when safe and 36 Table of Contents effective use of a therapeutic product depends on a diagnostic device, the FDA generally will require approval or clearance of the companion diagnostic device at the same time that the FDA approves the therapeutic product.
The FDA has articulated a policy position that, when safe and 35 Table of Contents effective use of a therapeutic product depends on a diagnostic device, the FDA generally will require approval or clearance of the companion diagnostic device at the same time that the FDA approves the therapeutic product.
In addition, government regulators and legislative bodies in the United States are considering numerous proposals that may result in limitations on the prices at which we could charge customers for our products if we have products that are approved for sale.
In addition, government regulators and legislative bodies in the United States have enacted laws and are considering numerous proposals that may result in limitations on the prices at which we could charge customers for our products if we have products that are approved for sale.
We or any of our future development partners will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates containing our proprietary vectors are safe and effective, with a favorable benefit-risk profile, for use in their target indications before we can seek regulatory approvals for their 33 Table of Contents commercial sale.
We or any of our future development partners will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates containing our proprietary vectors are safe and effective, with a favorable benefit-risk profile, for use in their target indications before we can seek regulatory approvals for their commercial sale.
If we are unable to reach agreements with suitable licensees or collaborators on a timely basis, on acceptable terms or at all, we may have to curtail the development of a product candidate, reduce or delay its development program, delay its potential commercialization, reduce the scope of any sales or marketing activities or increase our expenditures and undertake development or 43 Table of Contents commercialization activities at our own expense.
If we are unable to reach agreements with suitable licensees or collaborators on a timely basis, on acceptable terms or at all, we may have to curtail the development of a product candidate, reduce or delay its development program, delay its potential commercialization, reduce the scope of any sales or marketing activities or increase our expenditures and undertake development or commercialization activities at our own expense.
In the European Union, marketing authorization may be granted to a similar medicinal product for the same orphan indication if: • the second applicant can establish in its application that its medicinal product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior; 38 Table of Contents • the holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or • the holder of the marketing authorization for the original orphan medicinal product cannot supply sufficient quantities of orphan medicinal product.
In the European Union, marketing authorization may be granted to a similar medicinal product for the same orphan indication if: • the second applicant can establish in its application that its medicinal product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior; • the holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or • the holder of the marketing authorization for the original orphan medicinal product cannot supply sufficient quantities of orphan medicinal product.
Several of our lead product candidates are in the early stages of development and all of our lead product candidates will require substantial clinical development and testing, manufacturing bridging studies and process validation and regulatory approval prior to commercialization.
Some of our lead product candidates are in the early stages of development and all of our product candidates will require substantial clinical development and testing, manufacturing bridging studies and process validation and regulatory approval prior to commercialization.
Regulatory authorities also may require additional trials if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and could result in a delay in our desired clinical and commercial timelines. Given the nature of biologics manufacturing, there is a risk of contamination during manufacturing.
Regulatory authorities also may require additional trials if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and could result in a delay in our desired clinical and commercial timelines. 44 Table of Contents Given the nature of biologics manufacturing, there is a risk of contamination during manufacturing.
The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations or to give preference to U.S. industry.
The government can exercise its march-in rights if it determines that action is necessary because we fail to 53 Table of Contents achieve practical application of the government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations or to give preference to U.S. industry.
Obtaining coverage and reimbursement for a product from third-party payors is a time-consuming and costly process that could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data. We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement.
Obtaining coverage and reimbursement for a product from third-party payors is a time-consuming and costly process that could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data. We may not be able to provide data sufficient to gain coverage and reimbursement.
Our future capital requirements will depend on many factors, including: • the timing of enrollment, commencement and completion of our clinical trials; • the results of our clinical trials; • the results of our preclinical studies for our product candidates and any subsequent clinical trials; • the scope, progress, results and costs of drug discovery, laboratory testing, preclinical development and clinical trials for our product candidates; • the costs associated with building out additional laboratory and manufacturing capacity; • the costs, timing and outcome of regulatory review of our product candidates; • the costs of future product sales, medical affairs, marketing, manufacturing and distribution activities for any of our product candidates for which we receive marketing approval; • revenue, if any, received from commercial sales of our products, should any of our product candidates receive marketing approval; • revenue received from commercial sales of Zolgensma and the timing and amount of Zolgensma royalties paid to HCR under our royalty purchase agreement; • revenue received from other commercial sales of our licensees’ and collaborators’ products, should any of their product candidates receive marketing approval, and other revenue received under our licensing agreements and collaborations; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; • our current licensing agreements or collaborations remaining in effect, including the AbbVie Collaboration and License Agreement; • our ability to establish and maintain additional licensing agreements or collaborations on favorable terms, if at all; and • the extent to which we acquire or in-license other product candidates and technologies.
Our future capital requirements will depend on many factors, including: • the timing of enrollment, commencement and completion of our clinical trials; • the results of our clinical trials; • the results of our preclinical studies for our product candidates and any subsequent clinical trials; • the scope, progress, results and costs of drug discovery, laboratory testing, preclinical development and clinical trials for our product candidates; • the costs associated with building out additional laboratory and manufacturing capacity; • the costs, timing and outcome of regulatory review of our product candidates; • the costs of future product sales, medical affairs, marketing, manufacturing and distribution activities for any of our product candidates for which we receive marketing approval; • revenue, if any, received from commercial sales of our products, should any of our product candidates receive marketing approval; 38 Table of Contents • revenue received from commercial sales of Zolgensma and the timing and amount of Zolgensma royalties paid to HCR under our royalty purchase agreement; • revenue received from other commercial sales of our licensees’ and collaborators’ products, should any of their product candidates receive marketing approval, and other revenue received under our licensing agreements and collaborations; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; • our current licensing agreements or collaborations remaining in effect, including the AbbVie Collaboration and License Agreement, and our ability to timely achieve any milestones set forth in such agreements or collaborations; • our ability to establish and maintain additional licensing agreements or collaborations on favorable terms, if at all; and • the extent to which we acquire or in-license other product candidates and technologies.
This could result in our experiencing significant increases in costs and substantial delays in obtaining, or never obtaining, marketing approval for our product candidates to treat patients. The inability to market our product candidates to treat patients for the intended indications would materially harm our business, financial condition, results of operations and prospects.
This could result in significant cost increases and substantial delays in obtaining, or never obtaining, marketing approval for our product candidates to treat patients. The inability to market our product candidates to treat patients for the intended indications would materially harm our business, financial condition, results of operations and prospects.
Such proceedings could result in the revocation or cancellation of or amendment to our patents in such a way that they no longer cover our NAV Technology Platform or our product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
Such proceedings could result in the revocation or cancellation of or amendment to our patents in such a way that they no longer cover our NAV Technology 57 Table of Contents Platform or our product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable.
Drug development is a long, expensive and uncertain process, and delay or failure can occur at any stage of development, including after commencement of any of our clinical trials. The results of preclinical studies and early clinical trials are not always predictive of future results.
Drug development is a long, expensive and uncertain process, and delay or failure can occur at any stage of development, including after commencement of any of our clinical trials. 32 Table of Contents The results of preclinical studies and early clinical trials are not always predictive of future results.
In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could materially harm the price of our common stock.
In addition, there could be 56 Table of Contents public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could materially harm the price of our common stock.
The issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline. Adequate additional financing may not be available to us on acceptable terms, or at all.
The issuance of additional securities, whether equity or debt, by us, including through our at-the-market program, or the possibility of such issuance, may cause the market price of our common stock to decline. Adequate additional financing may not be available to us on acceptable terms, or at all.
If we or any of our vendors, contract laboratories or suppliers are found to be out of compliance with cGMP, we may experience delays or disruptions in manufacturing while we work to remedy the violation or while we work to identify suitable replacement vendors, contract laboratories or suppliers.
If we or any of our vendors, contract laboratories or suppliers are found to be out of compliance with cGMP, we may experience delays or disruptions in manufacturing while we work to remedy the violation or while 43 Table of Contents we work to identify suitable replacement vendors, contract laboratories or suppliers.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can 57 Table of Contents because of their greater financial resources and more mature and developed intellectual property portfolios.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios.
Lastly, certain patients’ immune systems might prohibit the successful delivery of certain gene therapy products to the target tissue, thereby limiting the treatment outcomes. The insurance coverage and reimbursement status of newly approved products is uncertain.
Lastly, certain patients’ immune systems might prohibit the successful delivery of certain gene therapy products to the target tissue, thereby limiting the treatment outcomes. 46 Table of Contents The insurance coverage and reimbursement status of newly approved products is uncertain.
The inflation rebates may require us to pay rebates if we increased the cost of a covered Medicare Part B or Part D approved product faster than the rate of inflation. At this time, we are unable to predict how these recent legislative changes might affect our business.
The inflation rebates may require us to pay rebates if we increased the cost of a covered Medicare Part B or Part D covered product faster than the rate of inflation. At this time, we are unable to predict how these recent legislative changes or any future legislation might affect our business.
Failure by AbbVie to meet its obligations under our AbbVie Collaboration and License Agreement, apply sufficient efforts at developing and commercializing licensed products, or comply with applicable legal or regulatory requirements, may materially adversely affect our business.
Failure by AbbVie to 41 Table of Contents meet its obligations under our AbbVie Collaboration and License Agreement, apply sufficient efforts at developing and commercializing licensed products, or comply with applicable legal or regulatory requirements, may materially adversely affect our business.
Moreover, reimbursement agencies in the European Union may be more conservative 48 Table of Contents than CMS. It is difficult to predict what third-party payors will decide with respect to the coverage and reimbursement for our product candidates.
Moreover, reimbursement agencies in the European Union may be more conservative than CMS. It is difficult to predict what third-party payors will decide with respect to the coverage and reimbursement for our product candidates.
Such efforts may require more resources than are typically required due to the 46 Table of Contents complexity and uniqueness of our potential products.
Such efforts may require more resources than are typically required due to the complexity and uniqueness of our potential products.
Risk Factor Summary Risks Related to Our NAV Technology Platform and the Development of Our Product Candidates • It is difficult to predict the time and cost of development and of obtaining regulatory approval for our product candidates. • Our business depends substantially on the success of our lead product candidates. • We have limited clinical results for most of our product candidates. • Regulatory authorities may not consider the endpoints of our clinical trials to provide clinically meaningful results. • The results from our preclinical studies or clinical trials for our product candidates may not support as broad a marketing approval as we seek, and we may be required to conduct additional clinical trials or evaluate subjects for a follow-up period. • We may encounter substantial delays in our planned clinical trials, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities. • Undesirable side effects may delay or prevent our product candidates and those of our licensees or collaborators from obtaining regulatory approval, limit their commercial potential or result in significant negative consequences following approval. • We cannot predict when, or if, we will obtain regulatory approval to commercialize a product candidate. • The COVID-19 pandemic may affect our business, operations and preclinical and clinical development timelines and plans.
Risk Factor Summary Risks Related to Our NAV Technology Platform and the Development of Our Product Candidates • It is difficult to predict the time and cost of development and of obtaining regulatory approval for our product candidates. • Our business depends substantially on the success of our lead product candidates. • We have limited clinical results for most of our product candidates. • Regulatory authorities may not consider the endpoints of our clinical trials to provide clinically meaningful results. • The results from our preclinical studies or clinical trials for our product candidates may not support as broad a marketing approval as we seek, and we may be required to conduct additional clinical trials or evaluate subjects for a follow-up period. • We may encounter substantial delays in our planned clinical trials, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities. • We may be negatively impacted if the results of our planned clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates. • Undesirable side effects may delay or prevent our product candidates and those of our licensees or collaborators from obtaining regulatory approval, limit their commercial potential or result in significant negative consequences following approval. • We cannot predict when, or if, we will obtain regulatory approval to commercialize a product candidate.
Risks Related to Our Business Operations • We may not be successful in our efforts to identify or discover additional product candidates. • Our future success depends on our ability to retain key employees, consultants and advisors and to attract qualified personnel. • We may face liability for our conduct and that of our employees, principal investigators, consultants or commercial partners. • We may face product liability lawsuits. • We could become subject to fines or penalties related to the failure to comply with environmental, health and safety laws. • We and our collaborators or other contractors or consultants may suffer cybersecurity breaches. • Our customers are concentrated and therefore the loss of a significant customer may harm our business.
Risks Related to Our Business Operations • We may not be successful in our efforts to identify or discover additional product candidates. • We may not successfully execute or achieve the expected benefits of our strategic pipeline prioritization and restructuring plan or other cost-saving measures that we may take in the future. • Our future success depends on our ability to retain key employees, consultants and advisors and to attract qualified personnel. • We may face liability for our conduct and that of our employees, principal investigators, consultants or commercial partners. • We may face product liability lawsuits. • We could become subject to fines or penalties related to the failure to comply with environmental, health and safety laws. • We and our collaborators or other contractors or consultants may suffer cybersecurity breaches. • Our customers are concentrated and therefore the loss of a significant customer may harm our business.
Risks Related to Ownership of Our Common Stock Our operating results may fluctuate substantially, which makes our future operating results difficult to predict and could cause the price of our common stock to fluctuate substantially. We expect our operating results to be subject to fluctuations.
Patent and Trademark Office. 59 Table of Contents Risks Related to Ownership of Our Common Stock Our operating results may fluctuate substantially, which makes our future operating results difficult to predict and could cause the price of our common stock to fluctuate substantially. We expect our operating results to be subject to fluctuations.
Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s independent discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may materially harm our business.
Further, adequate remedies may not exist in the event of unauthorized use or disclosure. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s independent discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may materially harm our business.
The successful assertion of one or more large claims against us that exceed or are not covered by our insurance coverage or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could materially harm our business, financial condition, results of operations and prospects. 53 Table of Contents Our customers are concentrated and therefore the loss of a significant customer may harm our business.
The successful assertion of one or more large claims against us that exceed or are not covered by our insurance coverage or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could materially harm our business, financial condition, results of operations and prospects.
However, obtaining such approval from the European Commission following the opinion of EMA is a lengthy and expensive process. Additionally, the approval procedures in the UK for our product candidates may be uncertain following the UK’s exit from the European Union.
However, obtaining such approval from the European Commission following the opinion of EMA is a lengthy and expensive process. Additionally, the UK has its own separate approval procedures for our product candidates following the UK’s exit from the European Union.
If these third parties do not meet our deadlines or otherwise conduct the preclinical research and development activities and trials as required, our preclinical and clinical development programs could be delayed or unsuccessful. We do not have the ability to conduct all aspects of our preclinical research and development activities or clinical trials ourselves.
Risks Related to Third Parties We rely on third parties to conduct certain preclinical research and development activities and aspects of our clinical trials. If these third parties do not meet our deadlines or otherwise conduct the preclinical research and development activities and trials as required, our preclinical and clinical development programs could be delayed or unsuccessful.
To the extent that we raise additional capital by issuing equity securities, the share ownership of existing stockholders will be diluted.
To the extent that we raise additional capital by issuing equity securities, including through our at-the-market program, the share ownership of existing stockholders will be diluted.
Moreover, increasing efforts by government and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates.
Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the reimbursement in the United States and may be insufficient to generate commercially reasonable product revenues. 47 Table of Contents Moreover, increasing efforts by government and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates.
We have entered into agreements involving the licensing of parts of our NAV Technology Platform and relating to the development and commercialization of certain product candidates and plan to enter into additional licensing agreements or collaborations in the future.
If these licensing arrangements or collaborations are not successful, our business could be harmed. We have entered into agreements involving the licensing of parts of our NAV Technology Platform and relating to the development and commercialization of certain product candidates and plan to enter into additional licensing agreements or collaborations in the future.
Risks Related to Our Intellectual Property Our rights to license our NAV Technology Platform and to develop and commercialize our product candidates are subject, in part, to the terms and conditions of licenses granted to us by others.
Future license and royalty revenue is uncertain due to the contingent nature of our licenses granted to third parties. Risks Related to Our Intellectual Property Our rights to license our NAV Technology Platform and to develop and commercialize our product candidates are subject, in part, to the terms and conditions of licenses granted to us by others.
Our failure to become consistently profitable and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations.
Our failure to become consistently profitable and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause you to lose all or part of your investment.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.
In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management. 58 Table of Contents In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could materially harm our business.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could materially harm our business.
Our understanding of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our product candidates, are based on estimates.
Our understanding of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our product candidates, are based on estimates. These estimates may prove to be incorrect and new studies may reduce the estimated incidence or prevalence of these diseases.
Our litigation against Sarepta will have an uncertain outcome and may not result in the patent enforcement we desire. Our pending and future patent applications may not result in patents being issued which protect our technology or product candidates or which effectively prevent others from commercializing competitive technologies and product candidates.
Our pending and future patent applications may not result in patents being issued which protect our technology or product candidates or which effectively prevent others from commercializing competitive technologies and product candidates.
We face significant competition in an environment of rapid technological change and there is a possibility that our competitors may achieve regulatory approval before us or develop products that are safer, less expensive or more convenient or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize our product candidates.
If we fail to comply with the regulatory requirements, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed and our business, financial condition, results of operations and prospects will be harmed. 36 Table of Contents Risks Related to Our Financial Position We face significant competition in an environment of rapid technological change and there is a possibility that our competitors may achieve regulatory approval before us or develop products that are safer, less expensive or more convenient or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize our product candidates.
For example, the loss of, or damage to, clinical trial data for any of our product candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Our computer systems or our business partners’ computer systems may be vulnerable to service interruption or destruction, malicious intrusion and random attack.
For example, the loss of, or damage to, clinical trial data for any of our product candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
For example, we have filed a complaint for patent infringement against Sarepta Therapeutics, Inc. arising from its use of cultured host cell technology, which we believe is claimed in a patent we licensed from Penn, to make gene therapy products to treat Duchenne muscular dystrophy and Limb-girdle muscular dystrophy, among other products.
In this regard, we are engaged in patent litigation with Sarepta Therapeutics, Inc. (Sarepta) arising from its use of cultured host cell technology, which we believe is claimed in a patent we licensed from Penn, to make gene therapy products to treat Duchenne muscular dystrophy and Limb-girdle muscular dystrophy, among other products. In January 2024 the U.S.
If any of these events occur, we may be forced to abandon our development efforts with respect to a particular product candidate or fail to develop a potentially successful product candidate, which could materially harm our business, financial condition, results of operations and prospects.
Alternatively, we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement. 48 Table of Contents If any of these events occur, we may be forced to abandon our development efforts with respect to a particular product candidate or fail to develop a potentially successful product candidate, which could materially harm our business, financial condition, results of operations and prospects.
Even if we are able to generate revenues from sales of any of our product candidates or in connection with sales of any of our licensees’ or collaborators’ products, we may not become profitable and may need to obtain additional funding to continue operations. 41 Table of Contents Risks Related to Third Parties We rely on third parties to conduct certain preclinical research and development activities and aspects of our clinical trials.
Even if we are able to generate revenues from sales of any of our product candidates or in connection with sales of any of our licensees’ or collaborators’ products, we may not become profitable and may need to obtain additional funding to continue operations.
Failure to obtain this necessary capital when needed may force us to delay, limit or terminate certain of our licensing activities, product development efforts or other operations.
We may need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate certain of our licensing activities, product development efforts or other operations.
Our restated certificate of incorporation includes exclusive forum clauses for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Section 203 imposes certain restrictions on merger, business combinations and other transactions between us and holders of 15% or more of our common stock. 61 Table of Contents Our restated certificate of incorporation includes exclusive forum clauses for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
The forum selection clauses in our restated certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us, our directors, officers or other employees.
Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and to have consented to this provision. The forum selection clauses in our restated certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us, our directors, officers or other employees.
Our current revenues are derived from a concentrated customer base. Our revenues for the years ended December 31, 2022 and 2021 consisted solely of license and royalty revenue. One customer accounted for approximately 90% of our total revenues for the year ended December 31, 2022.
Our customers are concentrated and therefore the loss of a significant customer may harm our business. Our current revenues are derived from a concentrated customer base. Our revenues for the years ended December 31, 2023 and 2022 consisted solely of license and royalty revenue.
We also could be required to seek funds through arrangements with partners or otherwise that may require us to relinquish rights to our intellectual property, our product candidates or otherwise agree to terms unfavorable to us. 40 Table of Contents Although we have generated significant revenues from licensing our NAV Technology Platform and our other intellectual property, such as our licensing pursuant to the AbbVie Collaboration and License Agreement, we have never generated revenue from sales of our product candidates and may never do so in the future.
Although we have generated significant revenues from licensing our NAV Technology Platform and our other intellectual property, such as our licensing pursuant to the AbbVie Collaboration and License Agreement, we have never generated revenue from sales of our product candidates and may never do so in the future.
If these relationships and any related compensation result in perceived or actual conflicts of interest, the integrity of the data generated at the applicable clinical trial site may be jeopardized, which could result in substantial delays in our clinical trials and materially harm our business.
If these relationships and any related compensation result in perceived or actual conflicts of interest, the integrity of the data generated at the applicable clinical trial site may be jeopardized, which could result in substantial delays in our clinical trials and materially harm our business. 40 Table of Contents We have in the past, and in the future may, enter into licensing agreements or collaborations with third parties licensing parts of our NAV Technology Platform for the development of product candidates.
Two customers accounted for approximately 99% of our total revenues for the year ended December 31, 2021. We expect future license and royalty revenue to be derived from a limited number of licensees and collaborators. Future license and royalty revenue is uncertain due to the contingent nature of our licenses granted to third parties.
One customer accounted for approximately 95% of our total revenues for the year ended December 31, 2023. One customer accounted for approximately 90% of our total revenues for the year ended December 31, 2022. We expect future license and royalty revenue to be derived from a limited number of licensees and collaborators.
However, future price controls or other changes in pricing regulation or negative publicity related to the pricing of drugs and biologics generally could restrict the amount that we are able to charge for our future products, if any, which could adversely affect our revenue and results of operations. 49 Table of Contents Risks Related to Our Business Operations We may not be successful in our efforts to identify or discover additional product candidates and may fail to capitalize on programs or product candidates that may be a greater commercial opportunity or for which there is a greater likelihood of success.
However, future price controls or other changes in pricing regulation or negative publicity related to the pricing of drugs and biologics generally could restrict the amount that we are able to charge for our future products, if any, which could adversely affect our revenue and results of operations.
Risks Related to Our Financial Position We have incurred cumulative net losses and have had few profitable quarters since inception. We expect to regularly incur losses and may never again achieve or maintain profitability. Since inception, we have incurred cumulative net losses.
We have incurred cumulative net losses and have had few profitable quarters since inception. We expect to regularly incur losses until we have successfully commercialized one or more product candidates and may never achieve or maintain profitability in the future. Since inception, we have incurred cumulative net losses.
While we have entered into employment agreements with each of our executive officers, any of them could leave our employment at any time, as all of our employees are “at will” employees. We currently do not have “key person” insurance on any of our employees.
We are highly dependent on members of our executive team, the loss of any of whose services may adversely impact the achievement of our objectives. While we have entered into employment agreements with each of our executive officers, any of them could leave our employment at any time, as all of our employees are “at will” employees.
Any of these events could lead to clinical trial delays or failure to obtain regulatory approval, or impact our ability to successfully commercialize future product candidates, and therefore may cause our business, financial condition, results of operations and prospects to be materially harmed. 45 Table of Contents Failure to comply with ongoing manufacturing regulatory requirements could cause us to suspend production or put in place costly or time-consuming remedial measures, and shortages of resources or raw materials could result in delays in our research studies, preclinical and clinical development or marketing schedules.
Failure to comply with ongoing manufacturing regulatory requirements could cause us to suspend production or put in place costly or time-consuming remedial measures, and shortages of resources or raw materials could result in delays in our research studies, preclinical and clinical development or marketing schedules.
At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names.
In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also occupy approximately 72,000 square feet of office, laboratory and warehousing space at other locations in Rockville, Maryland and Washington, D.C., and approximately 10,000 square feet of office space in New York, New York, under leases that expire at various dates through 2029, some of which are renewable for additional years.
Biggest changeWe also occupy approximately 78,000 square feet of office, laboratory and warehousing space at other locations in Rockville, Maryland and Washington, D.C., and approximately 10,000 square feet of office space in New York, New York, under leases that expire at various dates through 2029, some of which are renewable for additional years.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following performance graph and related information shall not be deemed "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing. $100 investment in stock or index December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 REGENXBIO Inc. $ 100 $ 126 $ 123 $ 136 $ 98 $ 68 Nasdaq Composite $ 100 $ 97 $ 133 $ 192 $ 235 $ 159 Nasdaq Biotechnology $ 100 $ 91 $ 114 $ 144 $ 144 $ 130 64 Table of Contents Holders As of February 23, 2023, there were five holders of record of our common stock.
Biggest changeThe following performance graph and related information shall not be deemed "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing. $100 investment in stock or index December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 REGENXBIO Inc. $ 100 $ 98 $ 108 $ 78 $ 54 $ 43 Nasdaq Composite $ 100 $ 137 $ 198 $ 242 $ 163 $ 236 Nasdaq Biotechnology $ 100 $ 125 $ 158 $ 158 $ 142 $ 149 64 Table of Contents Holders As of February 22, 2024, there were six holders of record of our common stock.
The figures below assume an investment of $100 in our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index at the closing price on December 31, 2017 and assumes the reinvestment of dividends, if any. The comparisons shown in the graph below are based upon historical data.
The figures below assume an investment of $100 in our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index at the closing price on December 31, 2018 and assumes the reinvestment of dividends, if any. The comparisons shown in the graph below are based upon historical data.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on The Nasdaq Global Select Market under the symbol “RGNX.” Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2017 and December 31, 2022, with the cumulative total return of (a) the Nasdaq Composite Index and (b) the Nasdaq Biotechnology Index, over the same period.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on The Nasdaq Global Select Market under the symbol “RGNX.” Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2018 and December 31, 2023, with the cumulative total return of (a) the Nasdaq Composite Index and (b) the Nasdaq Biotechnology Index, over the same period.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe increase was primarily attributable to the following: • an increase of $33.6 million in costs associated with clinical trial activities for our lead product candidates, largely driven by the advancement of our RGX-314 clinical trials; • an increase of $20.4 million in manufacturing-related expenses, primarily related to clinical supply for our RGX-314 and RGX-202 clinical trials; • an increase of $13.4 million in personnel-related costs as a result of increased headcount of research and development personnel, including a $1.8 million increase in stock-based compensation expense, largely driven by the commencement of in-house manufacturing of clinical supply in 2022; and 75 Table of Contents • an increase of $7.1 million in costs for laboratories and facilities used by research and development personnel, including a $3.4 million increase in depreciation expense allocated to research and development functions, largely driven by the occupation of our new corporate headquarters in mid-2021 and the activation of our cGMP facility in mid-2022.
Biggest changeThe decrease in research and development expenses was partially offset by the following: • an increase of $7.2 million in costs for laboratories and facilities used by research and development personnel, including a $4.4 million increase in depreciation expense allocated to research and development functions, largely driven by the activation of our cGMP facility in mid-2022; and 75 Table of Contents • an increase of $4.7 million in personnel-related costs for research and development personnel, net of a $0.8 million decrease in stock-based compensation expense, largely driven by $3.0 million in restructuring charges for employee severance and benefits recognized in the fourth quarter of 2023.
We expect to continue to incur significant research and development expenses for the foreseeable future as we continue development of our product candidates and engage in early research and development for prospective product candidates and new technologies.
We expect to continue to incur significant research and development expenses for the foreseeable future as we continue the development of our product candidates and engage in early research and development for prospective product candidates and new technologies.
License agreements generally have a term at least equal to the life of the underlying patents, but are terminable at the option of the licensee.
License agreements generally have a term at least equal to the life of the underlying patents, but are terminable at the option of the licensee.
Stock-based Compensation We account for our stock-based compensation awards in accordance with ASC 718, Compensation—Stock Compensation . ASC 718 requires all stock-based awards to employees and nonemployees to be recognized as expense based on the grant date fair value of the awards.
Stock-based Compensation We account for our stock-based compensation awards in accordance with ASC 718, Compensation—Stock Compensation (ASC 718). ASC 718 requires all stock-based awards to employees and nonemployees to be recognized as expense based on the grant date fair value of the awards.
Additionally, the parties will share equally in the net profits and net losses associated with the commercialization of RGX-314 in the United States, and we are eligible to receive tiered royalties on net sales by AbbVie of RGX-314 outside the United States. • In January 2021, we completed a public offering of 4,899,000 shares of our common stock (inclusive of 639,000 shares pursuant to the full exercise by the underwriters of their option to purchase additional shares) at a price of $47.00 per share.
Additionally, the parties will share equally in the net profits and net losses associated with the commercialization of ABBV-RGX-314 in the United States, and we are eligible to receive tiered royalties on net sales by AbbVie of ABBV-RGX-314 outside the United States. • In January 2021, we completed a public offering of 4,899,000 shares of our common stock (inclusive of 639,000 shares pursuant to the full exercise by the underwriters of their option to purchase additional shares) at a price of $47.00 per share.
For additional information regarding our collaborative arrangements, including our RGX-314 collaboration with AbbVie which became effective in November 2021, please refer to Note 10, “License and Collaboration Agreements” to the accompanying audited consolidated financial statements. Accrued Research and Development Expenses We estimate our accrued research and development expenses as of each balance sheet date.
For additional information regarding our collaborative arrangements, including our ABBV-RGX-314 collaboration with AbbVie which became effective in November 2021, please refer to Note 10, “License and Collaboration Agreements” to the accompanying audited consolidated financial statements. Accrued Research and Development Expenses We estimate our accrued research and development expenses as of each balance sheet date.
Our programs and product candidates are described below: • RGX-314: We are developing RGX-314 in collaboration with AbbVie as a potential one-time treatment for wet age-related macular degeneration (wet AMD), diabetic retinopathy (DR) and other additional chronic retinal conditions which cause total or partial vision loss.
Our programs and product candidates are described below: • ABBV-RGX-314: We are developing ABBV-RGX-314 in collaboration with AbbVie as a potential one-time treatment for wet age-related macular degeneration (wet AMD), diabetic retinopathy (DR) and other additional chronic retinal conditions which cause total or partial vision loss.
Deferred revenue which is not expected to be recognized within 12 months from the reporting date is recorded as non-current on the consolidated balance sheets. 72 Table of Contents Collaborative Arrangements We evaluate our agreements with collaboration partners to determine whether they are within the scope of ASC 808, Collaborative Arrangements (Topic 808).
Deferred revenue which is not expected to be recognized within 12 months from the reporting date is recorded as non-current on the consolidated balance sheets. 72 Table of Contents Collaborative Arrangements We evaluate our agreements with collaboration partners to determine whether they are within the scope of ASC 808, Collaborative Arrangements (ASC 808).
We believe the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial statements and understanding and evaluating our reported financial results. Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (Topic 606).
We believe the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial statements and understanding and evaluating our reported financial results. Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (ASC 606).
Net cost reimbursement from AbbVie includes reimbursement of personnel and overhead costs attributable to the development of RGX-314, the underlying costs of which are reported as unallocated expenses in the table above. We typically utilize our employee and infrastructure resources across our development programs.
Net cost reimbursement from AbbVie includes reimbursement of personnel and overhead costs attributable to the development of ABBV-RGX-314, the underlying costs of which are reported as unallocated expenses in the table above. We typically utilize our employee and infrastructure resources across our development programs.
Our recent sources of liquidity include the following events and transactions: • Effective in November 2021, we entered into the AbbVie Collaboration Agreement for the development and commercialization of RGX-314.
Our recent sources of liquidity include the following events and transactions: • Effective in November 2021, we entered into the AbbVie Collaboration Agreement for the development and commercialization of ABBV-RGX-314.
We expect that our cash, cash equivalents and marketable securities as of December 31, 2022, will enable us to fund our operating expenses and capital expenditure requirements, and are sufficient to meet our financial commitments and obligations, for at least the next 12 months from the date of this report, based on our current business plan.
We expect that our cash, cash equivalents and marketable securities as of December 31, 2023, will enable us to fund our operating expenses and capital expenditure requirements, and are sufficient to meet our financial commitments and obligations, for at least the next 12 months from the date of this report, based on our current business plan.
Our license agreements are accounted for as contracts with customers within the scope of Topic 606, with the exception of transactions for which the counterparty is determined not to be a customer. At the inception of each license agreement, we determine the contract term for purposes of applying the requirements of Topic 606.
Our license agreements are accounted for as contracts with customers within the scope of ASC 606, with the exception of transactions for which the counterparty is determined not to be a customer. At the inception of each license agreement, we determine the contract term for purposes of applying the requirements of ASC 606.
For collaboration arrangements within the scope of Topic 808 that contain multiple elements, we identify the various transactions with the counterparty and determine if any unit of account is more reflective of a transaction with a customer and therefore should be accounted for within the scope of Topic 606.
For collaboration arrangements within the scope of ASC 808 that contain multiple elements, we identify the various transactions with the counterparty and determine if any unit of account is more reflective of a transaction with a customer and therefore should be accounted for within the scope of ASC 606.
Topic 606 requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.
ASC 606 requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.
Such arrangements are within the scope of Topic 808 if they involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities.
Such arrangements are within the scope of ASC 808 if they involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities.
For transactions that are accounted for pursuant to Topic 808, an appropriate method of recognition and presentation is determined and consistently applied. For transactions that are accounted for pursuant to Topic 606, we apply the five-step model as described in our revenue recognition policies.
For transactions that are accounted for pursuant to ASC 808, an appropriate method of recognition and presentation is determined and consistently applied. For transactions that are accounted for pursuant to ASC 606, we apply the five-step model as described in our revenue recognition policies.
Cash Flows from Financing Activities For the year ended December 31, 2022, our net cash used in financing activities primarily consisted of $33.1 million of Zolgensma royalties paid, net of imputed interest, under our royalty purchase agreement with HCR, and was partially offset by $4.5 million in proceeds received from the exercise of stock options and issuance of common stock under our employee stock purchase plan.
For the year ended December 31, 2022, our net cash used in financing activities primarily consisted of $33.1 million of Zolgensma royalties paid to HCR, net of imputed interest, under our royalty purchase agreement, and was partially offset by $4.5 million in proceeds received from the exercise of stock options and issuance of common stock under our employee stock purchase plan.
At contract inception, for contracts within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations and whether each promised good or service is distinct.
At contract inception, for contracts within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations and whether each promised good or service is distinct.
We intend to devote the majority of our current capital to clinical development, seeking regulatory approval of our product candidates and, if approved, commercialization of our product candidates, as well as additional capital expenditures needed to support these activities.
We intend to devote the majority of our current capital to preclinical research, clinical development, seeking regulatory approval of our product candidates and, if approved, commercialization of our product candidates, as well as additional capital expenditures needed to support these activities.
Research and Development Expense Our research and development expenses consist primarily of: • Salaries, wages and personnel-related costs, including benefits, travel and stock-based compensation, for our scientific personnel performing research and development activities; • costs related to executing preclinical studies and clinical trials; • costs related to acquiring, developing and manufacturing materials for preclinical studies and clinical trials; • fees paid to consultants and other third parties who support our product candidate development; • other costs in seeking regulatory approval of our product candidates; and • direct costs and allocated costs related to laboratories and facilities, depreciation expense, information technology and other overhead.
Research and Development Expense Our research and development expenses consist primarily of: • Salaries, wages and personnel-related costs, including benefits, travel and stock-based compensation, for our scientific personnel and others performing research and development activities; 68 Table of Contents • costs related to executing preclinical studies and clinical trials; • costs related to acquiring, developing and manufacturing materials for preclinical studies and clinical trials; • fees paid to consultants and other third parties who support our product candidate development; • other costs in seeking regulatory approval of our product candidates; and • direct costs and allocated costs related to laboratories and facilities, depreciation expense, information technology and other overhead.
Additionally, general and administrative expenses include facility-related and overhead costs not otherwise allocated to research and development expense, professional fees for accounting, legal, commercial and other advisory services, expenses associated with obtaining and maintaining patents, insurance costs, costs of our information systems and other general corporate activities.
Additionally, general and administrative expenses include facility-related and overhead costs not otherwise allocated to research and development expense, professional fees for accounting, legal, commercial and other advisory services, expenses associated with obtaining and maintaining patents, insurance costs, costs of our information systems and other 69 Table of Contents general corporate activities.
Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. 80 Table of Contents
Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. 79 Table of Contents
We are no longer obligated to pay sublicense fees to Penn under the license agreement, but remain 78 Table of Contents obligated to pay Penn royalties on net sales of licensed products, milestone fees and reimbursement of certain patent maintenance costs in accordance with the Penn License.
We are no longer obligated to pay sublicense fees to Penn under the license agreement, but remain obligated to pay Penn royalties on net sales of licensed products, milestone fees and reimbursement of certain patent maintenance costs in accordance with the Penn License.
We then recognize as revenue the amount of the transaction price that is allocated to respective performance obligations when (or as) the respective performance obligations are satisfied. We evaluate our contracts with customers for the presence of significant financing components.
We then recognize as revenue the amount of the transaction price that is allocated to respective performance obligations when (or as) the respective performance obligations are satisfied. 70 Table of Contents We evaluate our contracts with customers for the presence of significant financing components.
For the year ended December 31, 2022, our net cash used in operating activities of $207.5 million consisted of a net loss of $280.3 million, offset by adjustments for non-cash items of $58.9 million and favorable changes in working capital of $14.0 million.
For the year ended December 31, 2022, our net cash used in operating activities of $207.5 million consisted of a net loss of $280.3 million, offset by adjustments for non-cash items of $58.9 million and favorable changes in operating assets and liabilities of $14.0 million.
The increase was primarily attributable to a non-recurring charge of $9.2 million recognized in the first quarter of 2022 related to the amendment of our license agreement with The Trustees of the University of Pennsylvania (Penn) (the Penn License) to buy out our obligation to pay sublicense fees to Penn under the license agreement.
The decrease was largely attributable to a non-recurring charge of $9.2 million recognized in the first quarter of 2022 related to the amendment of our license agreement with The Trustees of the University of Pennsylvania (Penn) to buy out our obligation to pay sublicense fees to Penn under the license agreement.
Our future capital requirements will depend on many factors, including: • the timing of enrollment, commencement and completion of our clinical trials; • the results of our clinical trials; • the results of our preclinical studies for our product candidates and any subsequent clinical trials; • the scope, progress, results and costs of drug discovery, laboratory testing, preclinical development and clinical trials for our product candidates; • the costs associated with building out additional laboratory and manufacturing capacity; • the costs, timing and outcome of regulatory review of our product candidates; • the costs of future product sales, medical affairs, marketing, manufacturing and distribution activities for any of our product candidates for which we receive marketing approval; • revenue, if any, received from commercial sales of our products, should any of our product candidates receive marketing approval; • revenue received from commercial sales of Zolgensma and the timing and amount of Zolgensma royalties paid to HCR under our royalty purchase agreement; • revenue received from other commercial sales of our licensees’ and collaborators’ products, should any of their product candidates receive marketing approval, and other revenue received under our licensing agreements and collaborations; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; • our current licensing agreements or collaborations remaining in effect, including the AbbVie Collaboration Agreement; • our ability to establish and maintain additional licensing agreements or collaborations on favorable terms, if at all; and • the extent to which we acquire or in-license other product candidates and technologies. 79 Table of Contents Many of these factors are outside of our control.
Our future capital requirements will depend on many factors, including: • the timing of enrollment, commencement and completion of our clinical trials; • the results of our clinical trials; • the results of our preclinical studies for our product candidates and any subsequent clinical trials; • the scope, progress, results and costs of drug discovery, laboratory testing, preclinical development and clinical trials for our product candidates; • the costs associated with building out additional laboratory and manufacturing capacity; • the costs, timing and outcome of regulatory review of our product candidates; • the costs of future product sales, medical affairs, marketing, manufacturing and distribution activities for any of our product candidates for which we receive marketing approval; • revenue, if any, received from commercial sales of our products, should any of our product candidates receive marketing approval; • revenue received from commercial sales of Zolgensma and the timing and amount of Zolgensma royalties paid to HCR under our royalty purchase agreement; • revenue received from other commercial sales of our licensees’ and collaborators’ products, should any of their product candidates receive marketing approval, and other revenue received under our licensing agreements and collaborations; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; • our current licensing agreements or collaborations remaining in effect, including the AbbVie Collaboration Agreement, and our ability to timely achieve any milestones set forth in such agreements or collaborations; • our ability to establish and maintain additional licensing agreements or collaborations on favorable terms, if at all; and • the extent to which we acquire or in-license other product candidates and technologies.
Future Funding Requirements We have incurred cumulative losses since our inception and had an accumulated deficit of $441.6 million as of December 31, 2022. Our transition to recurring profitability is dependent upon achieving a level of revenues adequate to support our cost structure, which depends heavily on the successful development, approval and commercialization of our product candidates.
Future Funding Requirements We have incurred cumulative losses since our inception and had an accumulated deficit of $705.0 million as of December 31, 2023. Our transition to recurring profitability is dependent upon achieving a level of revenues adequate to support our cost structure, which depends heavily on the successful development, approval and commercialization of our product candidates.
For a full discussion and analysis of financial condition and results of operations for the year ended December 31, 2021, including a year-over-year comparison to the year ended December 31, 2020, please read the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2021, which we filed with the SEC on March 1, 2022.
For a full discussion and analysis of financial condition and results of operations for the year ended December 31, 2022, including a year-over-year comparison to the year ended December 31, 2021, please read the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2022, which we filed with the SEC on February 28, 2023.
Our federal NOL carryforwards and a portion of our state NOL carryforwards as of December 31, 2022 may be carried forward indefinitely. The remaining portion of our state NOL carryforwards and our federal and state credit carryforwards as of December 31, 2022 expire at various dates between 2029 and 2042.
Our federal NOL carryforwards and a portion of our state NOL carryforwards as of December 31, 2023 may be carried forward indefinitely. The remaining portion of our state NOL carryforwards and our federal and state credit carryforwards as of December 31, 2023 expire at various dates between 2029 and 2043.
Our product revenues, if any, and any commercial milestones or royalty payments under our licensing agreements, will be derived from or based on sales of products that may not be commercially available for many years, if at all.
In addition, our product candidates, if approved, may not achieve commercial success. Our product revenues, if any, and any commercial milestones or royalty payments under our licensing agreements, will be derived from or based on sales of products that may not be commercially available for many years, if at all.
Investment Income Investment income consists of interest income earned and gains and losses realized from our cash equivalents, marketable securities and non-marketable equity securities, as well as unrealized gains and losses on marketable equity securities. Cash equivalents are comprised of money market mutual funds and highly liquid debt securities with original maturities of 90 days or less at acquisition.
Investment Income Investment income consists of interest income earned and gains and losses realized from our cash equivalents, marketable securities and non-marketable equity securities. Cash equivalents are comprised of money market mutual funds and highly liquid debt securities with original maturities of 90 days or less at acquisition. Marketable securities are comprised of available-for-sale debt securities.
As of December 31, 2022, the total amount of future Zolgensma royalties to be paid to HCR under the agreement was $151.6 million if paid by November 7, 2024, or $191.6 million if paid after that date. We have no obligation to repay any amounts to HCR if total future Zolgensma royalty payments are not sufficient to repay these amounts.
As of December 31, 2023, the total amount of future Zolgensma royalties to be paid to HCR under the agreement was $102.0 million if paid by November 7, 2024, or $142.0 million if paid after that date. We have no obligation to repay any amounts to HCR if total future Zolgensma royalty payments are not sufficient to repay these amounts.
We do not expect to achieve such revenues, and expect to continue to incur losses, for at least the next several years. We expect that our research and development and general and administrative expenses will continue to increase for the foreseeable future as we continue the development of, and seek regulatory approval for, our product candidates.
We do not expect to achieve such revenues, and expect to continue to incur losses, for at least the next several years. We expect to continue to incur 78 Table of Contents significant research and development and general and administrative expenses for the foreseeable future as we continue the development of, and seek regulatory approval for, our product candidates.
Personnel costs including salaries, wages, benefits, bonuses and stock-based compensation expense, comprise a significant component of research and development and general and administrative expenses.
Operating Expenses Our operating expenses consist primarily of cost of revenues, research and development expenses and general and administrative expenses. Personnel costs including salaries, wages, benefits, bonuses and stock-based compensation expense, comprise a significant component of research and development and general and administrative expenses.
AFFINITY DUCHENNE ™ , a multicenter, open-label dose evaluation and dose expansion clinical trial to evaluate the safety, tolerability and clinical efficacy of a one-time intravenous (IV) dose of RGX-202 in patients with Duchenne, is active and recruiting patients. The AFFINITY BEYOND ™ trial, an observational screening study, is also active and recruiting patients.
AFFINITY DUCHENNE ™ is a multicenter, open-label dose evaluation and dose expansion clinical trial to evaluate the safety, tolerability and clinical efficacy of a one-time intravenous (IV) dose of RGX-202 in patients with Duchenne.
Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. The issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline. Adequate additional financing may not be available to us on acceptable terms, or at all.
The issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline. Adequate additional financing may not be available to us on acceptable terms, or at all.
As of December 31, 2022, we had federal net operating loss (NOL) carryforwards of $83.1 million, U.S. state NOL carryforwards of $118.0 million and federal and state research and development tax credit carryforwards of $62.6 million (net of unrecognized tax benefits of $0.1 million) which may be available to offset future income tax liabilities.
As of December 31, 2023, we had federal net operating loss (NOL) carryforwards of $212.7 million, U.S. state NOL carryforwards of $259.1 million and federal and state research and development tax credit carryforwards of $77.3 million (net of unrecognized tax benefits of $0.1 million) which may be available to offset future income tax liabilities.
We are also evaluating the efficacy, safety and tolerability of suprachoroidal delivery of RGX-314 through AAVIATE ® , a multi-center, open label, randomized, controlled, dose-escalation Phase II trial of RGX-314 for the treatment of wet AMD.
The AAVIATE ® trial is a multi-center, open label, randomized, controlled, dose-escalation Phase II trial to evaluate the efficacy, safety and tolerability of suprachoroidal delivery of ABBV-RGX-314 for the treatment of wet AMD.
Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory and marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success.
Many of these factors are outside of our control. Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory and marketing approval and achieve product sales.
In addition, revenue from our NAV Technology Platform licensing is dependent in part on the clinical and commercial success of our licensing partners, including the commercialization of Zolgensma, and in part on maintaining our license agreements with our licensor partners, including GlaxoSmithKline LLC (GSK) and Penn.
In addition, revenue from our NAV Technology Platform licensing is dependent in part on the clinical and commercial success of our licensing partners, including the commercialization of Zolgensma, and on maintaining our license agreements with our licensor partners, including GlaxoSmithKline LLC (GSK) and Penn. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.
The favorable changes in working capital were partially offset by a net decrease in total accounts payable and accrued expenses and other current liabilities of $6.8 million largely driven by decreases in accrued sublicense fees and royalties and income taxes payable. Other changes in working capital were incurred in the normal course of business.
The favorable changes in operating assets and liabilities were partially offset by a net decrease in total accounts payable and accrued expenses and other current liabilities of $6.8 million, which was driven primarily by decreases in accrued sublicense fees and royalties and income taxes payable.
As of December 31, 2022, our NAV Technology Platform was being applied in one FDA approved product (Zolgensma ® ), and the preclinical and clinical development of a number of partnered programs.
As of December 31, 2023, our NAV Technology Platform was being applied in one commercial product (Zolgensma ® ), and the preclinical and clinical development of a number of other licensed products.
Cash Flows Our consolidated cash flows were as follows (in thousands): Years Ended December 31, 2022 2021 2020 Net cash provided by (used in) operating activities $ (207,488 ) $ 218,875 $ (54,061 ) Net cash provided by (used in) investing activities (11,929 ) (406,642 ) 122,759 Net cash provided by (used in) financing activities (28,840 ) 195,250 200,214 Net increase (decrease) in cash and cash equivalents and restricted cash $ (248,257 ) $ 7,483 $ 268,912 Cash Flows from Operating Activities Our net cash provided by operating activities for the year ended December 31, 2022 decreased by $426.4 million from the year ended December 31, 2021.
Cash Flows Our consolidated cash flows were as follows (in thousands): Years Ended December 31, 2023 2022 2021 Net cash provided by (used in) operating activities $ (218,407 ) $ (207,488 ) $ 218,875 Net cash provided by (used in) investing activities 190,943 (11,929 ) (406,642 ) Net cash provided by (used in) financing activities (34,966 ) (28,840 ) 195,250 Net increase (decrease) in cash and cash equivalents and restricted cash $ (62,430 ) $ (248,257 ) $ 7,483 Cash Flows from Operating Activities Our net cash used in operating activities for the year ended December 31, 2023 increased by $10.9 million from the year ended December 31, 2022.
We receive payments from licensees based on the billing schedules established in each license agreement. Amounts recognized as revenue which have not yet been received from licensees, including unbilled royalties, are recorded as accounts receivable when our rights to the consideration are conditional solely upon the passage of time.
Amounts recognized as revenue which have not yet been received from licensees, including unbilled royalties, are recorded as accounts receivable when our rights to the consideration are conditional solely upon the passage of time. Amounts recognized as revenue which have not yet been received from licensees are recorded as contract assets when our rights to the consideration are not unconditional.
Accordingly, we provided a full valuation allowance for our net deferred tax assets as of December 31, 2022 and 2021. 74 Table of Contents Results of Operations Our consolidated results of operations were as follows (in thousands): Years Ended December 31, Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Revenues License and royalty revenue $ 112,724 $ 470,347 $ 154,567 $ (357,623 ) $ 315,780 Total revenues 112,724 470,347 154,567 (357,623 ) 315,780 Operating Expenses Cost of revenues 54,545 51,833 35,714 2,712 16,119 Research and development 242,453 181,437 166,294 61,016 15,143 General and administrative 85,281 79,333 63,817 5,948 15,516 Credit losses (recoveries) — (2,569 ) 7,678 2,569 (10,247 ) Other operating expenses (income) (6,679 ) 333 297 (7,012 ) 36 Total operating expenses 375,600 310,367 273,800 65,233 36,567 Income (loss) from operations (262,876 ) 159,980 (119,233 ) (422,856 ) 279,213 Other Income (Expense) Interest income from licensing 342 719 4,271 (377 ) (3,552 ) Investment income 5,383 6,825 9,723 (1,442 ) (2,898 ) Interest expense (23,254 ) (26,277 ) (771 ) 3,023 (25,506 ) Total other income (expense) (17,529 ) (18,733 ) 13,223 1,204 (31,956 ) Income (loss) before income taxes (280,405 ) 141,247 (106,010 ) (421,652 ) 247,257 Income Tax Benefit (Expense) 84 (13,407 ) (5,240 ) 13,491 (8,167 ) Net income (loss) $ (280,321 ) $ 127,840 $ (111,250 ) $ (408,161 ) $ 239,090 Comparison of the Years Ended December 31, 2022 and 2021 License and Royalty Revenue.
Accordingly, we provided a full valuation allowance for our net deferred tax assets as of December 31, 2023 and 2022. 74 Table of Contents Results of Operations Our consolidated results of operations were as follows (in thousands): Years Ended December 31, Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Revenues License and royalty revenue $ 90,242 $ 112,724 $ 470,347 $ (22,482 ) $ (357,623 ) Total revenues 90,242 112,724 470,347 (22,482 ) (357,623 ) Operating Expenses Cost of revenues 37,213 54,545 51,833 (17,332 ) 2,712 Research and development 232,266 242,453 181,437 (10,187 ) 61,016 General and administrative 88,494 85,281 79,333 3,213 5,948 Credit losses (recoveries) — — (2,569 ) — 2,569 Other operating expenses (income) 397 (6,679 ) 333 7,076 (7,012 ) Total operating expenses 358,370 375,600 310,367 (17,230 ) 65,233 Income (loss) from operations (268,128 ) (262,876 ) 159,980 (5,252 ) (422,856 ) Other Income (Expense) Interest income from licensing 25 342 719 (317 ) (377 ) Investment income 11,319 5,383 6,825 5,936 (1,442 ) Interest expense (6,862 ) (23,254 ) (26,277 ) 16,392 3,023 Total other income (expense) 4,482 (17,529 ) (18,733 ) 22,011 1,204 Income (loss) before income taxes (263,646 ) (280,405 ) 141,247 16,759 (421,652 ) Income Tax Benefit (Expense) 152 84 (13,407 ) 68 13,491 Net income (loss) $ (263,494 ) $ (280,321 ) $ 127,840 $ 16,827 $ (408,161 ) Comparison of the Years Ended December 31, 2023 and 2022 License and Royalty Revenue.
We are also evaluating the pharmacodynamics, safety and efficacy of RGX-314 in patients with wet AMD using the subretinal delivery approach in a Phase II bridging study using cGMP material produced by our NAVXpress ™ bioreactor platform process.
Food and Drug Administration (FDA) and the European Medicines Agency (EMA) in late 2025 through the first half of 2026. We are also evaluating the pharmacodynamics, safety and efficacy of ABBV-RGX-314 in patients with wet AMD using the subretinal delivery approach in a Phase II bridging study using Good Manufacturing Practices (cGMP) material produced by our NAVXpress™ bioreactor platform process.
(AbbVie), a subsidiary of AbbVie Inc., to jointly develop and commercialize RGX-314 (the AbbVie Collaboration Agreement). We recognized license and royalty revenue of $370.0 million upon the effective date of the collaboration in November 2021, and the collaboration may materially impact our future revenues, operating expenses and operating cash flows associated with the development and commercialization of RGX-314.
(AbbVie), a subsidiary of AbbVie Inc., to jointly develop and commercialize ABBV-RGX-314 (the AbbVie Collaboration Agreement). We recognized license and royalty revenue of $370.0 million upon the effective date of the collaboration in November 2021.
The following table summarizes our research and development expenses incurred during the years ended December 31, 2022, 2021 and 2020 (in thousands): Years Ended December 31, 2022 2021 2020 Direct Expenses RGX-314 $ 49,538 $ 26,084 $ 24,083 RGX-202 16,863 8,215 14,073 RGX-121 and RGX-111 12,265 10,795 13,646 Other product candidates 2,089 2,632 12,137 Total direct expenses 80,755 47,726 63,939 Unallocated Expenses Platform and new technologies 43,236 35,188 24,936 Personnel-related 90,383 76,979 63,531 Facilities and depreciation expense 22,820 18,918 12,488 Other unallocated 5,259 2,626 1,400 Total unallocated expenses 161,698 133,711 102,355 Total research and development $ 242,453 $ 181,437 $ 166,294 Direct expenses related to the development of RGX-314 for the years ended December 31, 2022 and 2021 include $19.3 million and $5.9 million, respectively, in net cost reimbursement from AbbVie under our eye care collaboration which were recorded as a reduction of research and development expenses during the periods.
The following table summarizes our research and development expenses incurred during the years ended December 31, 2023, 2022 and 2021 (in thousands): Years Ended December 31, 2023 2022 2021 Direct Expenses ABBV-RGX-314 $ 23,512 $ 49,538 $ 26,084 RGX-202 10,426 16,863 8,215 RGX-121 18,606 8,198 9,062 Other product candidates 8,490 6,156 4,365 Total direct expenses 61,034 80,755 47,726 Unallocated Expenses Platform and new technologies 41,583 43,236 35,188 Personnel-related 95,112 90,383 76,979 Facilities and depreciation expense 28,842 22,820 18,918 Other unallocated 5,695 5,259 2,626 Total unallocated expenses 171,232 161,698 133,711 Total research and development $ 232,266 $ 242,453 $ 181,437 Direct expenses related to the development of ABBV-RGX-314 for the years ended December 31, 2023, 2022 and 2021 include $74.2 million, $19.3 million and $5.9 million, respectively, in net cost reimbursement from AbbVie under our eye care collaboration which were recorded as a reduction of research and development expenses.
The following five steps are performed to determine the appropriate revenue recognition for arrangements within the scope of Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies the performance obligations. 70 Table of Contents We apply the five-step model to contracts that are within the scope of Topic 606 only when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer.
The following five steps are performed to determine the appropriate revenue recognition for arrangements within the scope of ASC 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies the performance obligations.
Enrollment is ongoing in the pivotal program of CAMPSIITE TM , a Phase I/II/III multi-center, open-label trial to evaluate the efficacy, safety, tolerability and pharmacodynamics of RGX-121 in patients with MPS II up to 5 years old.
CAMPSIITE ® is a Phase I/II/III multi-center, open-label trial to evaluate the efficacy, safety, tolerability and pharmacodynamics of RGX-121 in patients with MPS II aged 4 months up to 5 years old. We continue to follow patients in the trial, and in February 2024, we reported that the pivotal phase of the CAMPSIITE trial achieved its primary endpoint.
For additional information regarding the AbbVie Collaboration Agreement, please refer to Note 10, “License and Collaboration Agreements—AbbVie Collaboration and License Agreement” to the accompanying audited consolidated financial statements. Operating Expenses Our operating expenses consist primarily of cost of revenues, research and development expenses and general and administrative expenses.
The AbbVie Collaboration Agreement may materially impact our future revenues, research and development expenses, other operating expenses and operating cash flows associated with the development and commercialization of ABBV-RGX-314. For additional information regarding the AbbVie Collaboration Agreement, please refer to Note 10, “License and Collaboration Agreements—AbbVie Collaboration and License Agreement” to the accompanying audited consolidated financial statements.
Cash Flows from Investing Activities For the year ended December 31, 2022, our net cash used in investing activities primarily consisted of $184.9 million to purchase marketable debt securities and $30.7 million to purchase property and equipment, partially offset by $203.1 million in maturities of marketable debt securities.
Cash Flows from Investing Activities For the year ended December 31, 2023, our net cash provided by investing activities consisted of $285.5 million in maturities of marketable debt securities and $2.0 million in proceeds received from uniQure upon the achievement of milestones associated with their acquisition of Corlieve, offset by $86.6 million to purchase marketable debt securities and $10.0 million to purchase property and equipment. 77 Table of Contents For the year ended December 31, 2022, our net cash used in investing activities primarily consisted of $184.9 million to purchase marketable debt securities and $30.7 million to purchase property and equipment, partially offset by $203.1 million in maturities of marketable debt securities.
The primary objective is to evaluate the prevalence of AAV8 antibodies in patients with Duchenne up to 12 years of age.
The AFFINITY BEYOND ™ trial, an observational screening study, is also active and recruiting patients. The primary objective is to evaluate the prevalence of AAV8 antibodies in patients with Duchenne up to 12 years of age.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2022, we had cash, cash equivalents and marketable securities of $565.2 million, which were primarily derived from the sale of our common stock, license and royalty revenue and the monetization of our Zolgensma royalty stream.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2023, we had cash, cash equivalents and marketable securities of $314.1 million, which were primarily derived from the sale of our common stock and license fees received under the AbbVie Collaboration Agreement.
If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval and adequate labeling, our ability to generate future revenues will be materially compromised. 67 Table of Contents We license our NAV Technology Platform and other intellectual property rights to other biotechnology and pharmaceutical companies, including collaborators for the joint development and commercialization of our product candidates.
If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval and adequate labeling, our ability to generate future revenues will be materially compromised.
Interest expense is recognized using the effective interest method, based on our estimate of total royalty payments expected to be received by HCR under the royalty purchase agreement. For further information regarding the royalty purchase agreement with HCR, please refer to Note 7, “Liability Related to Sale of Future Royalties” to the accompanying audited consolidated financial statements.
For further information regarding the royalty purchase agreement with HCR, please refer to Note 7, “Liability Related to Sale of Future Royalties” to the accompanying audited consolidated financial statements.
The aggregate net proceeds from the offering, inclusive of the underwriters’ option exercise, were $216.1 million, net of underwriting discounts and commissions and offering expenses payable by us. • In December 2020, we entered into a royalty purchase agreement with HCR to monetize a portion of our Zolgensma royalty stream.
The aggregate net proceeds from the offering, inclusive of the underwriters’ option exercise, were $216.1 million, net of underwriting discounts and commissions and offering expenses payable by us.
General and administrative expenses increased by $5.9 million, from $79.3 million for the year ended December 31, 2021 to $85.3 million for the year ended December 31, 2022.
Investment income increased by $5.9 million, from $5.4 million for the year ended December 31, 2022 to $11.3 million for the year ended December 31, 2023.
Adjustments for non-cash items primarily consisted of stock-based compensation expense of $40.8 million and depreciation and amortization expense of $12.9 million. The changes in working capital include an increase in other liabilities of $8.1 million primarily attributable to a long-term liability recorded during the period related to the amendment of the Penn License in the first quarter of 2022.
The changes in operating assets and liabilities include an increase in other liabilities of $8.1 million, which was driven primarily by a long-term liability recorded during the period related to the amendment of the Penn License in the first quarter of 2022.
Estimated royalties are reconciled to actual amounts reported in subsequent periods, and any differences are recognized as an adjustment to royalty revenue in the period the royalties are reported. Sales-based milestone payments related to net sales of Zolgensma are recognized as royalty revenue in the period in which the milestone is achieved.
Estimated royalties are reconciled to actual amounts reported in subsequent periods, and any differences are recognized as an adjustment to royalty revenue in the period the royalties are reported. We receive payments from licensees based on the billing schedules established in each license agreement.
We allocate indirect expenses associated with our facilities, information technology costs, depreciation and other overhead costs between research and development and general and administrative categories based on employee headcount and the nature of work performed by each employee or using other reasonable allocation methodologies. 68 Table of Contents Cost of Revenues Our cost of revenues consists primarily of upstream fees due to our licensors as a result of revenue generated from the licensing of our NAV Technology Platform and other intellectual property rights, including sublicense fees and royalties on net sales of licensed products.
We allocate indirect expenses associated with our facilities, information technology costs, depreciation and other overhead costs between research and development and general and administrative categories based on employee headcount and the nature of work performed by each employee or using other reasonable allocation methodologies.
For reporting periods through December 31, 2020, we did not have sufficient historical or implied volatility data for our 73 Table of Contents common stock necessary to estimate expected volatility over a period of time commensurate with the expected term of our stock option awards.
We estimate expected stock price volatility based on the historical volatility of our common stock over a period of time 73 Table of Contents commensurate with the expected term of our stock option awards.
Platform and new technologies include direct costs not identifiable with a specific lead product candidate, including costs associated with our research and development platform used across programs, process development, manufacturing analytics and early research and development for prospective product candidates and new technologies. 69 Table of Contents General and Administrative Expense Our general and administrative expenses consist primarily of salaries, wages and personnel-related costs, including benefits, travel and stock-based compensation, for employees performing functions other than research and development.
Platform and new technologies reported in the table above include direct costs not identifiable with a specific lead product candidate, including costs associated with our research and development platform used across programs, process development, manufacturing analytics and early research and development for prospective product candidates and new technologies.
The remaining $2.0 million increase in general and administrative expenses in 2022 was primarily attributable to travel and meeting-related expenses and other corporate overhead costs. Other Operating Expenses (Income). Other operating expenses (income) were $(6.7) million for the year ended December 31, 2022, as compared to $0.3 million for the year ended December 31, 2021.
General and administrative expenses increased by $3.2 million, from $85.3 million for the year ended December 31, 2022 to $88.5 million for the year ended December 31, 2023. The increase was primarily attributable to personnel-related costs, professional fees for corporate advisory services and other corporate overhead expenses. Other Operating Expenses (Income).
We expect to initiate the Phase I/II clinical trial in the first half of 2023. Overview of Our NAV Technology Platform In addition to our internal product development efforts, we also selectively license the NAV Technology Platform to other leading biotechnology and pharmaceutical companies, which we refer to as NAV Technology Licensees.
For additional information regarding the corporate restructuring, please refer to Note 14, “Restructuring” to the accompanying audited consolidated financial statements. Overview of Our NAV Technology Platform In addition to our internal product development efforts, we also selectively license the NAV Technology Platform to other leading biotechnology and pharmaceutical companies, which we refer to as NAV Technology Licensees.
Other changes in working capital were incurred in the normal course of business.
Other changes in operating assets and liabilities occurred in the normal course of business as a result of changes in operating working capital.
Marketable securities are comprised of available-for-sale debt securities and equity securities. Interest Expense Interest expense consists primarily of interest imputed on the liability related to the sale of future Zolgensma royalties to entities managed by Healthcare Royalty Management, LLC (collectively, HCR).
Interest Expense Interest expense consists primarily of interest imputed on the liability related to the sale of future Zolgensma royalties to entities managed by Healthcare Royalty Management, LLC (collectively, HCR). Interest expense is recognized using the effective interest method, based on our estimate of total royalty payments expected to be received by HCR under the royalty purchase agreement.
Information collected in this study may be used to identify potential participants for the AFFINITY DUCHENNE trial and potential future trials of RGX-202. 66 Table of Contents • RGX-121: We are developing RGX-121 for the treatment of Mucopolysaccharidosis Type II (MPS II), a rare disease caused by a deficiency of the IDS gene which encodes I2S, an enzyme that is responsible for the breakdown of structures that dispose of waste products inside cells.
Information collected in this study may be used to identify potential participants for the AFFINITY DUCHENNE trial and potential future trials of RGX-202. • RGX-121: We are developing RGX-121 as an investigational one-time AAV therapeutic for the treatment of Mucopolysaccharidosis Type II (MPS II), also known as Hunter syndrome, using the NAV AAV9 vector to deliver the gene that encodes the iduronate-2-sulfatase enzyme.
For the year ended December 31, 2021, our net cash provided by operating activities of $218.9 million consisted of net income of $127.8 million, adjustments for non-cash items of $50.8 million and favorable changes in working capital of $40.2 million.
For the year ended December 31, 2023, our net cash used in operating activities of $218.4 million consisted of a net loss of $263.5 million and unfavorable changes in operating assets and liabilities of $10.9 million, offset by adjustments for non-cash items of $56.0 million.
Additionally, our estimates are based on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect.
In addition, we may not achieve the expected benefits of any cost reduction measures on our currently anticipated timeline, or at all. Furthermore, our estimates are based on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect which could accelerate our liquidity needs.
This includes certain personnel in executive, commercial, corporate development, finance, legal, human resources, information technology, facilities and administrative support functions.
General and Administrative Expense Our general and administrative expenses consist primarily of salaries, wages and personnel-related costs, including benefits, travel and stock-based compensation, for employees performing functions other than research and development. This includes certain personnel in executive, commercial, corporate development, finance, legal, human resources, information technology, facilities and administrative support functions.
We are evaluating two separate routes of administration of RGX-314 to the eye: a subretinal delivery procedure as well as a targeted, in-office administration to the suprachoroidal space. We have licensed certain exclusive rights to the SCS Microinjector ® from Clearside Biomedical, Inc. (Clearside) to deliver gene therapy treatments to the suprachoroidal space of the eye.
ABBV-RGX-314 uses the NAV ® AAV8 vector to deliver a gene encoding a therapeutic antibody fragment to inhibit vascular endothelial growth factor (VEGF). We have licensed certain exclusive rights to the SCS Microinjector ® from Clearside Biomedical, Inc. (Clearside) to deliver gene therapy treatments to the suprachoroidal space of the eye.
Investment income decreased by $1.4 million, from $6.8 million for the year ended December 31, 2021 to $5.4 million for the year ended December 31, 2022. The decrease was primarily attributable to a realized gain of $5.2 million recognized in 2021 upon the acquisition of our non-marketable equity securities of Corlieve Therapeutics SAS (Corlieve) by uniQure N.V.
The increase was largely attributable to a realized gain of $2.2 million recognized in 2023 upon the achievement of milestones associated with the acquisition of our non-marketable equity securities of Corlieve Therapeutics SAS (Corlieve) by uniQure N.V. (uniQure) in July 2021. The remaining increase was primarily attributable to higher yields on investments in cash equivalents and marketable debt securities.
Please refer to the “Risk Factors” section of this Annual Report on Form 10-K for further discussion of the risks we face as a result of the COVID-19 pandemic. Financial Overview Revenues Our revenues to date consist primarily of license and royalty revenue resulting from the licensing of our NAV Technology Platform and other intellectual property rights.
Financial Overview Revenues Our revenues to date consist primarily of license and royalty revenue resulting from the licensing of our NAV Technology Platform and other intellectual property rights. We have not generated any revenues from commercial sales of our own products.
License and royalty revenue decreased by $357.6 million, from $470.3 million for the year ended December 31, 2021 to $112.7 million for the year ended December 31, 2022. The decrease was primarily attributable to non-recurring revenue of $370.0 million recognized in 2021 upon the effectiveness of our collaboration and license agreement with AbbVie for the development and commercialization of RGX-314.
License and royalty revenue decreased by $22.5 million, from $112.7 million for the year ended December 31, 2022 to $90.2 million for the year ended December 31, 2023. The decrease was primarily attributable to Zolgensma royalty revenues, which decreased by $16.6 million, from $101.9 million in 2022 to $85.3 million in 2023.
Amounts recognized as revenue which have not yet been received from licensees are recorded as contract assets when our rights to the consideration are not unconditional. Contract assets are recorded as other current assets on the consolidated balance sheets.
Contract assets are recorded as other current assets on the consolidated balance sheets.
For the year ended December 31, 2021, our net cash provided by financing activities primarily consisted of $216.1 million in net proceeds received from a public offering of our common stock completed in January 2021, net of underwriting discounts and commissions and other offering expenses paid during the period, and $6.0 million in proceeds received from the exercise of stock options and issuance of common stock under our employee stock purchase plan, and was partially offset by $26.6 million of Zolgensma royalties paid, net of imputed interest, under our royalty purchase agreement with HCR.
Cash Flows from Financing Activities For the year ended December 31, 2023, our net cash used in financing activities primarily consisted of $42.3 million of Zolgensma royalties paid to HCR, net of imputed interest, under our royalty purchase agreement.
The increase in research and development expenses was partially offset by an increase of $13.4 million in net development cost reimbursement from AbbVie recorded in 2022 under our RGX-314 collaboration, which was recorded as a reduction of research and development expenses. General and Administrative Expense.
The changes in operating assets and liabilities include an increase in other current assets of $10.5 million, which was driven primarily by an increase in net cost reimbursement due from AbbVie under our ABBV-RGX-314 collaboration. Other changes in operating assets and liabilities occurred in the normal course of business as a result of changes in operating working capital.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign Currency Exchange Rate Risk We are exposed to foreign currency exchange rate risk as a result of entering into transactions denominated in currencies other than U.S. dollars, primarily including euros, British pounds and Japanese yen. All foreign currency transactions settle on the applicable spot exchange basis at the time such payments are made.
Biggest changeForeign Currency Exchange Rate Risk We are exposed to foreign currency exchange rate risk as a result of entering into transactions denominated in currencies other than U.S. dollars, primarily including euros and British pounds. All foreign currency transactions settle on the applicable spot exchange basis at the time such payments are made.
If market interest rates were to increase immediately and uniformly by 100 basis points, or one percentage point, from levels at December 31, 2022, we estimate that the increase would have resulted in a hypothetical decline of $4.0 million in the net fair value of our interest-sensitive securities.
If market interest rates were to increase immediately and uniformly by 100 basis points, or one percentage point, from levels at December 31, 2023, we estimate that the increase would have resulted in a hypothetical decline of $1.5 million in the net fair value of our interest-sensitive securities.
As of December 31, 2022 and 2021, we had cash, cash equivalents and marketable securities of $565.2 million and $849.3 million, respectively. Our cash equivalents and marketable securities as of December 31, 2022 consisted of money market mutual funds, U.S. government and agency securities, certificates of deposit and corporate bonds.
As of December 31, 2023 and 2022, we had cash, cash equivalents and marketable securities of $314.1 million and $565.2 million, respectively. Our cash equivalents and marketable securities as of December 31, 2023 consisted of money market mutual funds, U.S. government and agency securities, certificates of deposit and corporate bonds.
A similar increase in market interest rates as of December 31, 2021 would have resulted in an estimated hypothetical decline of $7.1 million in the net fair value of our interest-sensitive securities as of December 31, 2021.
A similar increase in market interest rates as of December 31, 2022 would have resulted in an estimated hypothetical decline of $4.0 million in the net fair value of our interest-sensitive securities as of December 31, 2022.

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