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What changed in MeiraGTx Holdings plc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MeiraGTx Holdings plc'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.

+706 added−649 removedSource: 10-K (2024-03-15) vs 10-K (2023-03-14)

Top changes in MeiraGTx Holdings plc's 2023 10-K

706 paragraphs added · 649 removed · 519 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

208 edited+68 added−62 removed313 unchanged
Biggest changeThe third patent family, with claims directed to compositions of matter and methods of use relating to our retinitis pigmentosa program and the botaretigene sparoparvovec product candidate, includes 42 issued patents in the United States (two patents), Albania, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan (three patents), Latvia, Lithuania, Luxembourg, Malta, Monaco, Netherlands, North Macedonia, Norway, Poland, Portugal, Romania, San Moreno, Serbia, Slovakia, Slovenia, 25 Table of Contents Spain, Sweden, Switzerland/Liechtenstein, Turkey and the United Kingdom and four pending applications in Europe, Canada, China and Hong Kong.
Biggest changeThe second patent family includes 46 issued patents in the United States, Albania, Australia, Austria, Belgium, Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Monaco, Netherlands, North Macedonia, Norway, Poland, Portugal, Romania, San Marino, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland/Liechtenstein, Turkey and the United Kingdom and 15 pending patent applications with claims directed to compositions of matter and methods of use in the United States, African Regional Intellectual Property Organization, Brazil, Canada, Egypt, Eurasian Patent Organization, India, Indonesia (two applications), Republic of Korea, New Zealand, Philippines (two applications), South Africa and Vietnam.
Our gene therapy product candidate AAV-CNGB3 was granted orphan drug designation by the FDA and the European Commission for the treatment of achromatopsia caused by mutations in the CNGB3 gene, rare pediatric disease designation by the FDA for the treatment of achromatopsia caused by mutations in the CNGB3 gene, and Fast Track designation by the FDA for the treatment of achromatopsia caused by CNGB3 mutations.
Our gene therapy product candidate AAV-CNGB3 was granted orphan drug designation by the FDA and orphan designation by the European Commission for the treatment of achromatopsia caused by mutations in the CNGB3 gene, rare pediatric disease designation by the FDA for the treatment of achromatopsia caused by mutations in the CNGB3 gene, and Fast Track designation by the FDA for the treatment of achromatopsia caused by CNGB3 mutations.
Each of these programs are directed towards the underlying cell biology that may be driving neurogeneration in these diseases. ALS ALS is a devastating, progressive, neurodegenerative disease leading to the loss of motor neurons, which are the neurons that control the ability to move, speak, swallow and ultimately to breathe. The gradual paralysis in ALS invariably leads to death.
Each of these programs is directed towards the underlying cell biology that may be driving neurogeneration in these diseases. ALS ALS is a devastating, progressive, neurodegenerative disease leading to the loss of motor neurons, which are the neurons that control the ability to move, speak, swallow and ultimately to breathe. The gradual paralysis in ALS invariably leads to death.
Patents issued from this family are expected to expire February 2, 2037, not including any patent term adjustments that may extend the patent term in certain jurisdictions.
Patents issued from this family are expected to expire February 2, 2037, not including any patent term adjustments that may extend the patent term in certain jurisdictions.
In addition, if a product receives the first FDA approval for the indication for which it has orphan designation, the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other application, including a full BLA, to market the same drug or biologic for the same disease or condition for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer with orphan exclusivity is unable to assure sufficient quantities of the approved orphan-designated product.
In addition, if a product receives the first FDA approval for the indication for which it has orphan drug designation, the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other application, including a full BLA, to market the same drug or biologic for the same disease or condition for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer with orphan exclusivity is unable to assure sufficient quantities of the approved orphan drug-designated product.
Marketing Authorizations In the EU, medicinal products can only be placed on the market after obtaining a marketing authorization, or MA. To obtain regulatory approval of an investigational chemical or biological product in the EU, we must submit a marketing authorization application, or MAA. The process for doing this depends, among other things, on the nature of the medicinal product.
Marketing Authorizations In the EU, medicinal products can only be placed on the market after obtaining an MA. To obtain regulatory approval of an investigational chemical or biological product in the EU, we must submit a marketing authorization application, or MAA. The process for doing this depends, among other things, on the nature of the medicinal product.
The centralized procedure is compulsory for certain types of product candidates, such as: (i) medicinal products derived from biotechnology processes, such as genetic engineering, (ii) medicinal products containing a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative diseases, autoimmune and other immune dysfunctions and viral diseases, (iii) designated orphan medicines and (iv) ATMPs, such as gene therapy, somatic cell therapy or tissue-engineered medicines.
The centralized procedure is compulsory for certain types of product candidates, such as: (i) medicinal products derived from biotechnology processes, such as genetic engineering, (ii) medicinal products containing a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative or autoimmune diseases, and other immune dysfunctions and viral diseases, (iii) designated orphan medicines and (iv) ATMPs, such as gene therapy, somatic cell therapy or tissue-engineered medicines.
Data Privacy and Security Laws In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations promulgated thereunder, or collectively, HIPAA, and federal and state consumer protection laws and regulations (e.g., Section 5 of the Federal Trade Commission Act), that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners.
Data Privacy and Security Laws In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations promulgated thereunder, or collectively, HIPAA, and federal and state and consumer protection laws and regulations (e.g., Section 5 of the Federal Trade Commission Act), govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners.
This patent family includes 16 issued patents in the United States, Canada, Australia, Austria, Belgium, Denmark, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom. Patents issued from this family are expected to expire August 30, 2033, not including any patent term extensions or adjustments that may extend the patent term in certain jurisdictions.
This patent family includes 16 issued patents in the United States, Australia, Austria, Belgium, Canada, Denmark, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden, Switzerland/Liechtenstein and the United Kingdom. Patents issued from this family are expected to expire August 30, 2033, not including any patent term extensions or adjustments that may extend the patent term in certain jurisdictions.
Wet and Dry Neovascular Age Related Macular Degeneration (AMD) We are developing pre-clinical programs relating to neovascular age related macular degeneration, or wet AMD. We use a gene therapy product to deliver an antibody targeting the vascular endothelial growth factor receptor 2, or anti-VEGFR2, with the aim of blocking disease related vascular formation in the eye.
Wet and Dry Neovascular Age Related Macular Degeneration (AMD) We are developing pre-clinical programs relating to neovascular age related macular degeneration, or wet AMD. We use a gene therapy product candidate to deliver an antibody targeting the vascular endothelial growth factor receptor 2, or anti-VEGFR2, with the aim of blocking disease related vascular formation in the eye.
The conduct of the preclinical tests must comply with federal regulations and requirements, including GLPs. The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing and controls, information about product chemistry, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.
The conduct of certain preclinical tests must comply with certain federal regulations and requirements, including GLPs. The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing and controls, information about product chemistry, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.
The period of market exclusivity is extended by two years for orphan medicinal products that have also complied with an agreed pediatric investigation plan, or PIP. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.
The period of market exclusivity is extended by two years for orphan medicinal products that have also complied with an agreed pediatric investigation plan, or PIP. Orphan designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.
Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.
Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.
We also have three Phase 1/2 clinical programs targeting IRDs, including AAV-CNGB3 and AAV-CNGA3 for the treatment of achromatopsia, or ACHM, related to mutations in CNGB3 and CNGA3 genes, respectively, and AAV-RPE65 for retinal dystrophy related to mutations in the RPE65 gene, or RPE65 deficiency. We have completed enrollment and dosing in all three of these programs.
We have three Phase 1/2 clinical programs targeting IRDs, including AAV-CNGB3 and AAV-CNGA3 for the treatment of achromatopsia, or ACHM, related to mutations in CNGB3 and CNGA3 genes, respectively, and AAV-RPE65 for retinal dystrophy related to mutations in the RPE65 gene, or RPE65 deficiency. We have completed enrollment and dosing in all three of these programs.
License Agreements License Agreements with UCLB We previously entered into several license agreements with UCLB, covering the following inherited retinal disease programs: (a) ACHM caused by mutations in CNGB3; (b) ACHM caused by mutations in CNGA3; (c) XLRP; and (d) RPE65-mediated IRD (together, the “Licensed Gene Therapy Programs”).
License Agreements License Agreements with UCLB We previously entered into several license agreements with UCLB, covering the following inherited retinal disease programs: (a) ACHM caused by mutations in CNGB3; (b) ACHM caused by mutations in CNGA3; (c) XLRP caused by mutations in RPGR; and (d) RPE65-mediated IRD (together, the “Licensed Gene Therapy Programs”).
Any product submitted to the FDA for marketing, including a product that has received a Fast Track or Breakthrough Therapy designation, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.
Any product candidate submitted to the FDA for marketing, including a product that has received a Fast Track or Breakthrough Therapy designation, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.
We chose diseases of the eye as our first area of clinical focus because we believe the eye is ideally suited for gene therapy for the following reasons. ● The eye is easily accessible and has highly compartmentalized anatomy, which allows for accurate delivery of vectors to specific tissues using direct visualization and microsurgical techniques. ● The structure of the eye allows for efficient delivery to specific cell subtypes with small volumes of vector, making the dose per patient much lower than is needed for systemic treatment. ● Anatomical barriers and unique structure of the eye make the immune response to the intraocular administration of vectors more attenuated than systemic administration. 6 Table of Contents ● Largely non-dividing cell populations in the eye make good targets for potentially stable, long-term gene delivery and expression. ● The retina, a structure in the back of the eye, is visible and there are many well validated structural and functional readouts allowing the detailed assessment of the therapeutic impact of the gene therapy treatment.
We chose diseases of the eye as our first area of clinical focus because we believe the eye is ideally suited for gene therapy for the following reasons. ● The eye is easily accessible and has highly compartmentalized anatomy, which allows for accurate delivery of vectors to specific tissues using direct visualization and microsurgical techniques. ● The structure of the eye allows for efficient delivery to specific cell subtypes with small volumes of vector, making the dose per patient much lower than is needed for systemic treatment. ● Anatomical barriers and unique structure of the eye make the immune response to the intraocular administration of vectors more attenuated than systemic administration. ● Largely non-dividing cell populations in the eye make good targets for potentially stable, long-term gene delivery and expression. ● The retina, a structure in the back of the eye, is visible and there are many well validated structural and functional readouts allowing the detailed assessment of the therapeutic impact of the gene therapy treatment.
This clinical trial is being conducted in conjunction with the National Institute of Dental and Craniofacial Research at the United States National Institutes of Health, or the NIH, Dental Clinic. 14 Table of Contents In the third quarter of 2019, we also initiated an open-label, multi-center Phase 1 dose escalation clinical trial of a single administration of our product candidate AAV-hAQP1 to one or both parotid glands in patients with grade 2 or 3 RIX.
This clinical trial is being conducted in conjunction with the National Institute of Dental and Craniofacial Research at the United States National Institutes of Health, or the NIH, Dental Clinic. 8 Table of Contents In the third quarter of 2019, we also initiated an open-label, multi-center Phase 1 dose escalation clinical trial of a single administration of our product candidate AAV-hAQP1 to one or both parotid glands in patients with grade 2 or 3 RIX.
Orphan drug designation entitles a party to incentives such as reduction of fees or fee waivers, protocol assistance, and access to the centralized MA procedure. The application for orphan drug designation must be submitted before the MAA.
Orphan designation entitles a party to incentives such as reduction of fees or fee waivers, protocol assistance, and access to the centralized MA procedure. The application for orphan designation must be submitted before the MAA.
Additionally, we are developing a novel approach to treat advanced dry AMD patients who have lost central vision through our innovative “rod-to-cone” technology.
Additionally, we are developing a novel approach designed to treat advanced dry AMD patients who have lost central vision through our innovative “rod-to-cone” technology.
The applicant will receive a fee reduction for the MAA if the orphan drug designation has been granted, but not if the designation is still pending at the time the MA is submitted.
The applicant will receive a fee reduction for the MAA if the orphan designation has been granted, but not if the designation is still pending at the time the MA is submitted.
Manufacturing a special also imposes a five year record retention requirement subject to review by the MHRA, including details of any suspected adverse reaction to the product so sold or supplied of which the person is aware or 12 Table of Contents subsequently becomes aware, as well as a continuing obligation to notify the MHRA of any suspected adverse reaction to the medicinal product which is a serious adverse reaction.
Manufacturing a special also imposes a five year record retention requirement subject to review by the MHRA, including details of any suspected adverse reaction to the product so sold or supplied of which the person is aware or 16 Table of Contents subsequently becomes aware, as well as a continuing obligation to notify the MHRA of any suspected adverse reaction to the medicinal product which is a serious adverse reaction.
Xerostomia may be caused by a number of different insults to the salivary glands, including radiation therapy for head and neck cancer and certain autoimmune diseases. 13 Table of Contents AAV-hAQP1 for the Treatment of Radiation-Induced Grade 2/3 Xerostomia Radiation-induced xerostomia, or RIX, is a severe and debilitating long-term side effect of radiation treatment for head and neck cancer.
Xerostomia may be caused by a number of different insults to the salivary glands, including radiation therapy for head and neck cancer and certain autoimmune diseases. 7 Table of Contents AAV-hAQP1 for the Treatment of Radiation-Induced Grade 2/3 Xerostomia Radiation-induced xerostomia, or RIX, is a severe and debilitating long-term side effect of radiation treatment for head and neck cancer.
Government Regulation Outside of the United States In addition to regulations in the United States, we may be subject to a variety of regulations in other jurisdictions, for instance in the UK or EU, governing, among other things, clinical trials, marketing authorizations, post-marketing authorization requirements and any commercial sales and distribution of our products.
Government Regulation Outside of the United States In addition to regulations in the United States, we may be subject to a variety of regulations in other jurisdictions, for instance in the UK or EU, governing, among other things, clinical trials, marketing authorizations, or MA, post-MA requirements and any commercial sales and distribution of our products.
We also use other forms of protection, such as confidential information and trademark protection, particularly where we do not believe patent protection is appropriate or obtainable. Our patent portfolio consists of a combination of issued patents and pending patent applications that are owned or licensed from third parties.
We also use other forms of protection, such as confidential information and trademark protection, particularly where we do not believe patent protection is appropriate or obtainable. Our patent portfolio comprises a combination of issued patents and pending patent applications that are owned or licensed from third parties.
In addition to these four programs, AAV-AIPL1 has been manufactured and released for compassionate use under an MHRA specials license in the United Kingdom, or UK, to treat patients with Leber congenital amaurosis 4, or LCA4, caused by mutations in the AIPL1 gene.
In addition to these three programs, AAV-AIPL1 has been manufactured and released for compassionate use under an MHRA specials license in the United Kingdom, or UK, to treat patients with Leber congenital amaurosis 4, or LCA4, caused by mutations in the AIPL1 gene.
We seek to address this problem by sponsoring prospectively designed natural history studies in each of the indications that we are treating in our Phase ½ trials. For each of the natural history studies, baseline assessments are made upon enrollment, with follow up assessments at later time points.
We seek to address this problem by sponsoring prospectively designed natural history studies in each of the indications that we are treating in our Phase 1/2 trials. For each of the natural history studies, baseline assessments are made upon enrollment, with follow up assessments at later time points.
The first patent family includes 49 issued patents in the United States (two patents), African Regional Intellectual Property Organization, Albania, Australia, Austria, Belgium, Bulgaria, China, Croatia, Cyprus, Czech, Denmark, Estonia, Eurasian Patent Organization, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Monaco, Netherlands, North Macedonia, Norway, Philippines, Poland, Portugal, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland/Liechtenstein, Turkey and the United Kingdom and 22 pending patent applications with claims directed to compositions of matter and methods of use in the United States, Europe, African Regional Intellectual Property Organization, Australia, Brazil, Canada, China, Egypt, Eurasian Patent Organization, Hong Kong, India, Indonesia, Israel, Japan, Republic of Korea, Malaysia, Mexico, New Zealand (two applications), Philippines, Singapore, South Africa and Vietnam.
The first patent family includes 54 issued patents in the United States (two patents), African Regional Intellectual Property Organization, Albania, Australia, Austria, Belgium, Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Eurasian Patent Organization, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, India, Ireland, Israel (two patents), Italy, Japan (two patents), Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Monaco, Netherlands, New Zealand, North Macedonia, Norway, Philippines, Poland, Portugal, Romania, San Marino, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland/Liechtenstein, Turkey and the United Kingdom and 22 pending patent applications with claims directed to compositions of matter and methods of use in the United States, African Regional Intellectual Property Organization, Australia, Brazil, Canada, China, Egypt, Eurasian Patent Organization, European Patent Organization, Hong Kong (two applications), Indonesia, Japan, Republic of Korea, Mexico, New Zealand, Philippines, Singapore, South Africa (three applications) and Vietnam.
In May 2018, we were granted a license to manufacture gene therapy product candidates in our cGMP compliant manufacturing facility by the United Kingdom’s Medicines and Healthcare products Regulatory Agency, or MHRA. The MHRA re-certified the facility in the second quarter of 2020 .
In May 2018, we were granted a license to manufacture gene therapy product candidates in our GMP compliant manufacturing facility by the United Kingdom’s Medicines and Healthcare products Regulatory Agency, or MHRA. The MHRA re-certified the facility in the second quarter of 2020 .
The proof of concept for this mechanism and its ability to increase the volume of saliva secreted by damaged salivary glands was observed in a Phase 1 clinical trial conducted by the NIH in patients with chronic grade 2 or 3 RIX.
The proof of concept for this mechanism and its ability to increase the volume of fluid secreted by damaged salivary glands was observed in a Phase 1 clinical trial conducted by the NIH in patients with chronic grade 2 or 3 RIX.
Our Manufacturing Capabilities We own and operate a cGMP manufacturing facility situated in London, United Kingdom. Supporting our global approach to clinical development and market supply, we designed the 29,000 square foot facility to meet multiple regulatory standards, including the MHRA, EMA and FDA standards.
Our Manufacturing Capabilities We own and operate a GMP manufacturing facility situated in London, United Kingdom. Supporting our global approach to clinical development and market supply, we designed the 29,000 square foot facility to meet multiple regulatory standards, including the MHRA, EMA and FDA standards.
Concurrent with clinical trials, companies usually complete additional animal trials and must also develop additional information about the physical characteristics of the biological product candidate as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.
Concurrent with clinical trials, companies usually complete additional animal trials and must also develop additional information about the physical characteristics of the biological product candidate as well as finalize a process for manufacturing the product in commercial quantities in accordance with GMP and cGMP requirements, as applicable.
Post Brexit, the MHRA has updated various aspects of the regulatory regime for medicines in the UK, including: introducing the Innovative Licensing and Access Procedure to accelerate the time to market and facilitate patient access for innovative medicines; updates to the UK national approval procedure, 45 Table of Contents introducing a 150-day objective for assessing applications for MAs in the UK, Great Britain and Northern Ireland and a rolling review process for MA applications (rather than a consolidated full dossier submission).
Post Brexit, the MHRA has updated various aspects of the regulatory regime for medicines in the UK, including: introducing the Innovative Licensing and Access Procedure to accelerate the time to market and facilitate patient access for innovative medicines; updates to the UK national approval procedure, introducing a 150-day objective for assessing applications for MAs in the UK, Great Britain and Northern Ireland and a rolling review process for MA applications (rather than a consolidated full dossier submission).
Approximately 85% of patients who receive radiation treatment for head and neck cancer experience reduced saliva production during treatment, and approximately 50% of those patients who remain cancer free for two or more years after treatment continue to suffer from grade 2 or 3 RIX.
Approximately 85% of patients who receive radiation treatment for head and neck cancer experience reduced saliva production during treatment, and approximately 40% of those patients who remain cancer free for two or more years after treatment continue to suffer from grade 2 or 3 RIX.
AAV-GAD for the Treatment of Parkinson’s Disease Our first target indication is Parkinson’s disease, where we have Phase 2 clinical data from a successful randomized, double-blind, sham-controlled trial. 15 Table of Contents Affecting nearly one million Americans and 10 million worldwide, Parkinson’s disease is the second-most common neurodegenerative disease after Alzheimer’s disease and is the 14th-leading cause of death in the United States.
AAV-GAD for the Treatment of Parkinson’s Disease Our first target indication is Parkinson’s disease, where we have Phase 2 clinical data from a successful randomized, double-blind, sham-controlled trial. Affecting nearly one million Americans and 10 million worldwide, Parkinson’s disease is the second-most common neurodegenerative disease after Alzheimer’s disease and is the 14th-leading cause of death in the United States.
The ability to regulate transgenes by introducing temporal control has the potential to transform the gene therapy landscape and the biologics industry as a whole. Our approach focuses on riboswitches to regulate gene expression rather than on the modulation of transcription factor activity.
The ability to regulate transgenes by introducing temporal control has the potential to transform the gene therapy field and the biologics industry as a whole. Our approach focuses on riboswitches to regulate gene expression rather than on the modulation of transcription factor activity.
While the products we have in development do not make use of embryonic stem cells, it is possible that the national laws in certain EU member states may prohibit or restrict us from commercializing our products, even if they have been granted an MA. Data and Marketing Exclusivity The EU also provides opportunities for market exclusivity.
While the products we have in development do not make use of embryonic stem cells, it is possible that the national laws in certain EU member states may prohibit or restrict us from commercializing our products, even if they have been granted an MA. 43 Table of Contents Data and Marketing Exclusivity The EU also provides opportunities for market exclusivity.
It is associated with a progressive loss of motor control (e.g., shaking or tremor at rest and lack of facial expression), as well as non-motor symptoms (e.g., depression and anxiety). There is no cure for Parkinson’s disease and 60,000 new cases are diagnosed each year in the United States alone.
It is associated with a progressive loss of motor control (e.g., shaking or tremor at rest and lack of facial expression), as 9 Table of Contents well as non-motor symptoms (e.g., depression and anxiety). There is no cure for Parkinson’s disease and 60,000 new cases are diagnosed each year in the United States alone.
RMAT-designated products that receive accelerated approval may, as appropriate, fulfill their post-approval requirements through the submission of clinical 34 Table of Contents evidence, clinical trials, patient registries, or other sources of real world evidence (such as electronic health records); through the collection of larger confirmatory data sets; or via post-approval monitoring of all patients treated with such therapy prior to approval of the therapy.
RMAT-designated products that receive accelerated approval may, as appropriate, fulfill their post-approval requirements through the submission of clinical evidence, clinical trials, patient registries, or other sources of real world evidence (such as electronic health records); through the collection of larger confirmatory data sets; or via post-approval monitoring of all patients treated with such therapy prior to approval of the therapy.
Characterization of these disease-causing genes have implicated several cellular pathways in the disease, with a prominent role emerging for genes involved in the cellular control of RNA. Many new regulatory roles are being discovered for RNA, particularly in neurons.
Characterization of these disease-causing genes has implicated several cellular pathways in the disease, with a prominent role emerging for genes involved in the cellular control of RNA. Many new regulatory roles are being discovered for RNA, particularly in neurons.
Additionally, pursuant to the Stand-Alone UCLB Agreement related to CNGB3, we paid UCLB an upfront payment of £1.5 million and issued £1.5 million of the Company’s ordinary shares. Commencing on the first commercial sale of licensed products under each Stand-Alone UCLB Agreement, we must make low single-digit percentage royalty payments to UCLB on net sales of such products.
Additionally, pursuant to the Stand-Alone UCLB Agreement related to CNGB3, we paid UCLB an upfront payment of £1.5 million and issued £1.5 million of the Company’s ordinary shares. 27 Table of Contents Commencing on the first commercial sale of licensed products under each Stand-Alone UCLB Agreement, we must make low single-digit percentage royalty payments to UCLB on net sales of such products.
Our strategy for developing gene therapies targeting eye diseases is to begin with a number of monogenic IRDs that are good candidates for gene replacement therapies and expand to more common eye diseases over time.
Our strategy for developing gene therapies targeting eye diseases was to begin with a number of monogenic IRDs that are good candidates for gene replacement therapies and expand to more common eye diseases over time.
Additional data from this study were presented at the Retina Subspecialty Day of the American Academy of Ophthalmology Annual Meeting in October 2019. AAV-RPE65 met the study’s primary endpoint of safety and tolerability. Additionally, AAV-RPE65 demonstrated statistically significant improvement across several secondary endpoints assessing clinical activity.
Additional data from this study were presented at the Retina Subspecialty Day of the American Academy of Ophthalmology Annual Meeting in October 2019. 13 Table of Contents AAV-RPE65 met the study’s primary endpoint of safety and tolerability. Additionally, AAV-RPE65 demonstrated statistically significant improvement across several secondary endpoints assessing clinical activity.
Biologics may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions.
Biologics may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. 36 Table of Contents Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions.
Innovative products that target an unmet medical need and are expected to be of major public health interest may be eligible for a number of expedited development and review programs, such as the PRIME scheme, which provides incentives similar to the Breakthrough Therapy designation in the U.S.
Innovative products that target an unmet medical need and are expected to be of major public health interest may be eligible for a number of expedited development and review programs, such as the Priority Medicine, or PRIME, scheme, which provides incentives similar to the Breakthrough Therapy designation in the U.S.
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 35 Table of Contents 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 problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA, including withdrawal of the product from the market.
In March 2022, we completed enrollment of the study. A total of 24 patients received either unilateral (n=12) or bilateral (n=12) treatment in one of eight escalating dose cohorts of three patients each. In December 2022, we announced additional positive clinical data from the Phase 1 dose escalation clinical trial of AAV-hAQP1.
In March 2022, we completed enrollment of the study. A total of 24 patients received either unilateral (n=12) or bilateral (n=12) treatment in one of eight escalating dose cohorts of three patients each. In June 2023, we announced additional positive clinical data from the completed Phase 1 dose escalation clinical trial of AAV-hAQP1.
We are also required to pay Brandeis annual license maintenance fees ranging from $15,000 to $100,000 27 Table of Contents depending on the development stage of the licensed product. Commencing on the first commercial sale of licensed products, we must make low single-digit percentage royalty payments to Brandeis on net sales of such products.
We are also required to pay Brandeis annual license maintenance fees ranging from $15,000 to $100,000 depending on the development stage of the licensed product. Commencing on the first commercial sale of licensed products, we must make low single-digit percentage royalty payments to Brandeis on net sales of such products.
A total of 15 patients were treated in this clinical trial, including nine adult patients in three dose escalation cohorts and six pediatric patients in the pediatric extension arm of the trial. 9 Table of Contents In May 2019, we announced positive topline safety and efficacy data from the Phase 1/2 trial of AAV-RPE65.
A total of 15 patients were treated in this clinical trial, including nine adult patients in three dose escalation cohorts and six pediatric patients in the pediatric extension arm of the trial. In May 2019, we announced positive topline safety and efficacy data from the Phase 1/2 trial of AAV-RPE65.
However, guidance from the EMA states that they will be considered in the future in light of the scientific knowledge and regulatory experience gained at the time. 42 Table of Contents Orphan Medicinal Products The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United States.
However, guidance from the EMA states that they will be considered in the future in light of the scientific knowledge and regulatory experience gained at the time. Orphan Medicinal Products The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United States.
Similarly, an IRB can suspend or terminate approval of a clinical 30 Table of Contents study at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biological product candidate has been associated with unexpected serious harm to patients.
Similarly, an IRB can suspend or terminate approval of a clinical study at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biological product candidate has been associated with unexpected serious harm to patients.
The UK regulatory framework in relation to clinical trials is derived from existing EU legislation (as implemented into UK law, through secondary legislation), and after Brexit, EU laws on clinical trials (including the CTR) are no longer directly applicable in Great Britain (i.e., the UK excluding Northern Ireland).
The UK regulatory framework in relation to clinical trials is derived from existing EU legislation (as implemented into UK law, through secondary legislation), and after Brexit, EU laws on clinical trials (including the CTR) are not directly applicable in Great Britain (i.e., the UK excluding Northern Ireland).
A specials license allows physicians to prescribe a treatment of AAV-AIPL1 for LCA4 patients they deem appropriate. We play no role in the physician’s treatment decision.
A specials license allows physicians to prescribe a treatment of AAV-AIPL1 for patients with LCA4 that they deem appropriate. We play no role in the physician’s treatment decision.
The FDA and European Commission granted orphan designation to AAV-AIPL1 for treatment of inherited retina dystrophy due to defects in AIPL1 gene. Ophthalmology Preclinical Development Pipeline We also have a preclinical IRD development pipeline focused on diseases caused by mutations in additional genes.
The FDA granted orphan drug designation and the European Commission granted orphan designation to AAV-AIPL1 for treatment of inherited retinal dystrophy due to defects in the AIPL1 gene. Ophthalmology Preclinical Development Pipeline We also have a preclinical IRD development pipeline focused on diseases caused by mutations in additional genes.
In addition, certain state laws, such as the California Consumer Privacy Act, or CCPA, and the California Privacy Rights Act, or CPRA, govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In addition, certain state laws, such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act, or collectively, the CCPA, govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
The therapeutic protein would be manufactured by the body only in the presence of the small molecule so that intermittent production of the therapeutic protein would be achieved by dosing with the small molecule drug. This temporal regulation of gene therapy products by exogenous small molecules has long been a goal of gene therapy researchers.
The therapeutic protein would be manufactured by the patient’s body only in the presence of the small molecule so that intermittent production of the therapeutic protein would be achieved by dosing with the small molecule drug. This temporal regulation of gene expression by exogenous small molecules has long been a goal of gene therapy researchers.
The Brandeis Agreement may be terminated by Brandeis for our insolvency or for our material breach that remains uncured for 60 days (or for 30 days in the case of breaches related to payment obligations). Such material breach may be cured only once in any 12-month period.
The Brandeis Agreement may be terminated by Brandeis 28 Table of Contents for our insolvency or for our material breach that remains uncured for 60 days (or for 30 days in the case of breaches related to payment obligations). Such material breach may be cured only once in any 12-month period.
Sales of any product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, 36 Table of Contents commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by third-party payors.
Sales of any product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by third-party payors.
A REMS is a safety strategy to manage a known or potential serious risk associated with a medicine and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.
A REMS is a safety strategy to 33 Table of Contents manage a known or potential serious risk associated with a medicine and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.
Since the end of the Brexit transition period on January 1, 2021, Great Britain (England, Scotland and Wales) has not been directly subject to 44 Table of Contents EU laws, however under the terms of the Protocol on Ireland and Northern Ireland, EU laws have generally applied to Northern Ireland.
Since the end of the Brexit transition period on January 1, 2021, Great Britain (England, Scotland and Wales) has not been directly subject to EU laws, however under the terms of the Protocol on Ireland and Northern Ireland, EU laws have generally applied to Northern Ireland.
The Casey Eye Institute at the Oregon Health & Science University provides certain reading center and other clinical services with respect to our clinical trials. Our Gene Regulation Platform We are developing a potentially transformative technology designed to precisely and specifically control gene therapy expression levels via dose-response to orally delivered small molecules.
The Casey Eye Institute at the Oregon Health & Science University provides certain reading center and other clinical services with respect to our clinical trials. Our Gene Regulation Platform We have developed a potentially transformative technology designed to precisely and specifically control gene therapy expression levels via dose-response to orally delivered small molecules.
At 37 Table of Contents the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
To address LCA4, we developed a viral vector to replace the AIPL1 gene in all photoreceptors by using the AIPL1 cDNA driven by the rhodopsin kinase promoter, which is active in both rods and cones. We have manufactured and released AAV-AIPL1 for compassionate use under an MHRA specials license in the UK to treat LCA4 patients.
To address LCA4, we developed a viral vector to replace the AIPL1 gene in all photoreceptors by using the AIPL1 cDNA driven by the rhodopsin kinase promoter, which is active in both rods and cones. We have manufactured and released AAV-AIPL1 for compassionate use under an MHRA specials license in the UK to treat eight children with LCA4.
The FDA or the sponsor or its data safety monitoring board may suspend or permanently discontinue a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk or the clinical trial is not being conducted in accordance with FDA regulations.
The FDA or the sponsor or its data safety monitoring board may suspend or permanently discontinue a clinical trial at any time on various grounds, including a 31 Table of Contents finding that the research subjects or patients are being exposed to an unacceptable health risk or the clinical trial is not being conducted in accordance with FDA regulations.
Additionally, an MA may be granted to a similar product for the same indication at any time if (1) the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior, (2) the applicant consents to a second orphan medicinal product application; or (3) the applicant cannot supply enough orphan medicinal product.
Additionally, an MA may be granted to a similar product for the same indication at any time if (1) the second applicant can establish that its product, although similar, is 44 Table of Contents safer, more effective or otherwise clinically superior, (2) the applicant consents to a second orphan medicinal product application; or (3) the applicant cannot supply enough orphan medicinal product.
The centralized procedure is optional for product candidates containing a new active substance not yet authorized in the EU, or for product candidates that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.
The centralized procedure is optional for product candidates 41 Table of Contents containing a new active substance not yet authorized in the EU, or for product candidates that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.
Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.
Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different disease or condition for which the orphan product has exclusivity.
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to make compliance efforts more challenging, and can result in investigations, proceedings, or actions that lead to significant penalties and restrictions on data processing. U.S. Foreign Corrupt Practices Act The U.S.
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to make compliance efforts more challenging, and can result in investigations, proceedings, or actions that lead to significant penalties and restrictions on data processing. 39 Table of Contents U.S. Foreign Corrupt Practices Act The U.S.
The idea is that the gene encoding a particular biologic drug or a therapeutic antibody would be delivered to target cells in the body, but these genes would only be activated in the presence of a specific, proprietary small molecule.
The idea is that the gene encoding a particular biologic drug or a therapeutic antibody or peptide would be delivered to target cells in the body, but these transgenes would only be activated in the presence of a specific, proprietary small molecule.
The fourth patent family includes two issued patents in the United States and Japan and 22 pending patent applications with claims directed to compositions of matter and methods of use in the United States, Europe, African Regional Industrial Property Organization, Australia, Brazil, Canada, China, Egypt, Eurasian Patent Organization, Hong Kong, India, Indonesia, Israel, Republic of Korea, Malaysia, Mexico, New Zealand (two applications), Philippines, Singapore, South Africa and Vietnam.
The fifth patent family includes three issued patents in the United States, Australia and Japan and 22 pending patent applications with claims directed to compositions of matter and methods of use in the United States, African Regional Industrial Property Organization, Australia, Brazil, Canada, China, Egypt, Eurasian Patent Organization, European Patent Organization, Hong Kong, India, Indonesia, Israel, Republic of Korea, Malaysia, Mexico, New Zealand (two applications), Philippines, Singapore, South Africa and Vietnam.
Our gene therapy product candidate AAV-CNGA3 was granted orphan drug designation by the FDA and EMA, rare pediatric disease designation by the FDA, and in January 2021, was granted Fast Track designation by the FDA for the treatment of ACHM caused by CNGA3 mutations.
Our gene therapy product candidate AAV-CNGA3 was granted orphan drug designation by the FDA and orphan designation by the European Commission, rare pediatric disease designation by the FDA, and in January 2021, was granted Fast Track designation by the FDA for the treatment of ACHM caused by CNGA3 mutations.
Specifically, new biological products are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied.
Specifically, biological product candidates are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product candidate and the specific indication for which it is being studied.
A medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (2) 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 benefits derived from orphan status, would not generate sufficient return in the EU to justify investment; and (3) 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.
A medicinal product may be designated as orphan if its sponsor can establish that (1) the product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (2) 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 benefits derived from orphan status, would not generate sufficient return in the EU to justify the necessary investment; and (3) 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.
After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the CTR. Medicines used in clinical trials must be manufactured in accordance with good manufacturing practices, or GMP. Other national and EU-wide regulatory requirements may also apply.
After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the CTR. Medicines used in clinical trials must be manufactured in accordance with GMP. Other national and EU-wide regulatory requirements may also apply.
To make these duct cells permeable to water, AAV-hAQP1 introduces the gene for the human aquaporin water channel, or hAQP1 . We have demonstrated that this has the potential to convey water permeability and causes ductal cells to generate an osmotic gradient, which causes them to secrete fluid into the lumen of the duct.
To make these duct cells permeable to water, AAV-hAQP1 introduces the gene for the human aquaporin water channel, or hAQP1 . We have demonstrated that this has the potential to convey water permeability and cause ductal cells to generate an osmotic gradient, and secrete fluid into the lumen of the duct.
Expedited Development and Review Programs The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new 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 reviewing new biological product candidates that meet certain criteria.
Based on an estimated prevalence of approximately one in 500,000 people in the United States suffering from Leber congenital amaurosis, or LCA, related to mutations in the RPE65 gene, and approximately one in 70,000 people in the United States having RP due to mutations in the RPE65 gene, RPE65 -deficiency occurs in approximately one in 125,000 people in the United States.
Based on an estimated prevalence of approximately one in 500,000 people in the United States (U.S.) suffering from Leber congenital amaurosis, or LCA, related to mutations in the RPE65 gene, and approximately one in 70,000 people in the United States having retinitis pigmentosa, or RP, due to mutations in the RPE65 gene, RPE65 -deficiency occurs in approximately one in 125,000 people in the United States.
Other legislative changes have been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers of 2% per fiscal year, which was temporarily suspended from May 1, 2020 through March 31, 2022, and reduced payments to several types of Medicare providers.
Other legislative changes have been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers, which was temporarily suspended from May 1, 2020 through March 31, 2022, and reduced payments to several types of Medicare providers.
The sponsor must take out a clinical trial insurance policy, and in most EU member states, the sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical trial. The regulatory landscape related to clinical trials in the EU has been subject to recent changes.
The sponsor must take out a clinical trial insurance policy, and in most EU member states, the sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical trial. 40 Table of Contents The regulatory landscape related to clinical trials in the EU has been subject to recent changes.
We make this information available on our website as soon as reasonably practicable after we electronically file such information with, or furnish it to, the SEC. Our website and the information contained on or connected to that site are not incorporated into this Form 10-K.
We make this information available on our website as soon as reasonably practicable after we electronically file such information with, or furnish it to, the SEC. Our website and the information contained on or connected to that site are not incorporated into this Form 10-K. 49 Table of Contents

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

225 edited+61 added−44 removed398 unchanged
Biggest changeOur future funding requirements, both near and long-term, will depend on many factors, including, but not limited to: ● the progress, timing, costs and results of our ongoing clinical development for our X-linked retinitis pigmentosa product candidate, botaretigene sparoparvovec, including the ongoing Phase 3 Lumeos clinical trial of botaretigene sparoparvovec for the treatment of patients with XLRP, for our CNGB3 achromatopsia gene therapy product candidate, AAV-CNGB3, for our CNGA3 achromatopsia gene therapy product candidate, AAV-CNGA3, for our RPE65-associated retinal dystrophy product candidate, AAV-RPE65, and to continue to conduct our ongoing natural history studies for inherited retinal diseases, or IRDs; ● the progress, timing, costs and results of our clinical development for our radiation-induced xerostomia product candidate, AAV-hAQP1, and for our product candidate for the treatment of Parkinson’s disease, AAV-GAD; 49 Table of Contents ● the development of our product candidate for the treatment of ALS, AAV-UPF1, for our product candidate for the treatment of xerostomia associated with Sjogren’s syndrome, AAV-hAQP1, and our product candidate for the treatment of neovascular age related macular degeneration, or wet AMD; ● the development of potentially transformative gene regulation technology designed to precisely and specifically control gene therapy expression levels via dose-response to orally delivered small molecules; ● continuing our current research programs and our preclinical development of product candidates from our current research programs; ● seeking to identify, assess, acquire and/or develop additional research programs and additional product candidates; ● the preclinical testing and clinical trials for any product candidates we identify and develop; ● the outcome, timing and cost of meeting regulatory requirements established by the FDA, MHRA, EMA and other regulatory authorities; ● the cost of expanding and protecting our intellectual property portfolio, including filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights; ● the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us or any of our product candidates; ● the effect of competing technological and market developments; ● the cost of further developing and scaling our manufacturing facilities and processes; ● the cost and timing of completion of commercial-scale manufacturing facilities and activities; ● the cost of making royalty, milestone or other payments under current and any future in-license agreements; ● our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements; ● the extent to which we in-license or acquire rights to other products, product candidates and technologies; ● the cost of establishing sales, marketing and distribution capabilities for our product candidates in regions where we choose to commercialize our products; and ● the initiation, progress, timing and results of our commercialization of our product candidates, if approved for commercial sale.
Biggest changeOur future funding requirements, both near and long-term, will depend on many factors, including, but not limited to: ● the progress, timing, costs and results of our clinical development for our radiation-induced xerostomia product candidate, AAV-hAQP1, and for our product candidate for the treatment of Parkinson’s disease, AAV-GAD; ● the progress, timing, costs and results of our ongoing clinical development for our CNGB3 achromatopsia gene therapy product candidate, AAV-CNGB3, for our CNGA3 achromatopsia gene therapy product candidate, AAV-CNGA3, for our RPE65-associated retinal dystrophy product candidate, AAV-RPE65, and to continue to conduct our ongoing natural history studies for IRDs; 52 Table of Contents ● the development of our product candidate for the treatment of ALS, AAV-UPF1, for our product candidate for the treatment of xerostomia associated with Sjogren’s syndrome, AAV-hAQP1, and our product candidate for the treatment of neovascular age related macular degeneration, or wet AMD; ● the development of our potentially transformative gene regulation technology designed to precisely and specifically control gene therapy expression levels via dose-response to orally delivered small molecules; ● the extent to which we receive the milestone payments under the Asset Purchase Agreement with Janssen; ● continuing our current research programs and our preclinical development of product candidates from our current research programs; ● seeking to identify, assess, acquire and/or develop additional research programs and additional product candidates; ● the preclinical testing and clinical trials for any product candidates we identify and develop; ● the outcome, timing and cost of meeting regulatory requirements established by the FDA, MHRA, EMA and other regulatory authorities; ● the cost of expanding and protecting our intellectual property portfolio, including filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights; ● the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us or any of our product candidates; ● the effect of competing technological and market developments; ● the cost of further developing and scaling our manufacturing facilities and processes; ● the cost and timing of completion of commercial-scale manufacturing facilities and activities; ● the cost of making royalty, milestone or other payments under current and any future in-license agreements; ● our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements; ● the extent to which we in-license or acquire rights to other products, product candidates and technologies; ● the cost of establishing sales, marketing and distribution capabilities for our product candidates in regions where we choose to commercialize our products; and ● the initiation, progress, timing and results of our commercialization of our product candidates, if approved for commercial sale. 53 Table of Contents Raising additional capital through the sale of equity or convertible debt securities will dilute your ownership interest, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder.
Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the EU Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the EU Clinical Trials Directive remain governed by said EU Clinical Trials Directive until January 31, 2025.
Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the EU Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the EU Clinical Trials Directive remain governed by said Directive until January 31, 2025.
We may seek orphan drug designation for other current and future product candidates.
We may seek orphan drug designation and orphan designation for other current and future product candidates.
Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. In addition, while we intend to seek orphan drug designation for other existing and future product candidates, we may never receive such designations.
Neither orphan drug designation nor orphan designation shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. In addition, while we intend to seek orphan drug designation and orphan designation for other existing and future product candidates, we may never receive such designations.
The process of establishing and maintaining collaborative relationships is difficult, time-consuming and involves significant uncertainty, such as: ​ ● a collaboration partner may shift its priorities and resources away from our product candidates due to a change in business strategies, or a merger, acquisition, sale or downsizing; ​ ● a collaboration partner may seek to renegotiate or terminate their relationships with us due to unsatisfactory clinical results, manufacturing issues, a change in business strategy, a change of control or other reasons; ​ ● a collaboration partner may cease development in therapeutic areas which are the subject of our strategic collaboration; ​ ● a collaboration partner may not devote sufficient capital or resources towards our product candidates; ​ ● a collaboration partner may change the success criteria for a product candidate thereby delaying or ceasing development of such candidate; ​ ● a significant delay in initiation of certain development activities by a collaboration partner will also delay payment of milestones tied to such activities, thereby impacting our ability to fund our own activities; ​ ● a collaboration partner could develop a product that competes, either directly or indirectly, with our product candidate; ​ 84 Table of Contents ● a collaboration partner with commercialization obligations may not commit sufficient financial or human resources to the marketing, distribution or sale of a product; ​ ● a collaboration partner with manufacturing responsibilities may encounter regulatory, resource or quality issues and be unable to meet demand requirements; ​ ● a collaboration partner may terminate a strategic alliance; ​ ● a dispute may arise between us and a partner concerning the research, development or commercialization of a product candidate resulting in a delay in milestones, royalty payments or termination of an alliance and possibly resulting in costly litigation or arbitration which may divert management attention and resources; and ​ ● a partner may use our products or technology in such a way as to make us subject to litigation with a third party. ​ If any collaborator fails to fulfill its responsibilities in a timely manner, or at all, our research, clinical development, manufacturing or commercialization efforts related to that collaboration could be delayed or terminated, or it may be necessary for us to assume responsibility for expenses or activities that would otherwise have been the responsibility of our collaborator.
The process of establishing and maintaining collaborative relationships is difficult, time-consuming and involves significant uncertainty, such as: ​ ● a collaboration partner may shift its priorities and resources away from our product candidates due to a change in business strategies, or a merger, acquisition, sale or downsizing; ​ ● a collaboration partner may seek to renegotiate or terminate their relationships with us due to unsatisfactory clinical results, manufacturing issues, a change in business strategy, a change of control or other reasons; ​ ● a collaboration partner may cease development in therapeutic areas which are the subject of our strategic collaboration; ​ ● a collaboration partner may not devote sufficient capital or resources towards our product candidates; ​ ● a collaboration partner may change the success criteria for a product candidate thereby delaying or ceasing development of such candidate; ​ ● a significant delay in initiation of certain development activities by a collaboration partner will also delay payment of milestones tied to such activities, thereby impacting our ability to fund our own activities; ​ ● a collaboration partner could develop a product that competes, either directly or indirectly, with our product candidate; ​ ● a collaboration partner with commercialization obligations may not commit sufficient financial or human resources to the marketing, distribution or sale of a product; ​ ● a collaboration partner with manufacturing responsibilities may encounter regulatory, resource or quality issues and be unable to meet demand requirements; ​ ● a collaboration partner may terminate a strategic alliance; ​ ● a dispute may arise between us and a partner concerning the research, development or commercialization of a product candidate resulting in a delay in milestones, royalty payments or termination of an alliance 88 Table of Contents and possibly resulting in costly litigation or arbitration which may divert management attention and resources; and ​ ● a partner may use our products or technology in such a way as to make us subject to litigation with a third party. ​ If any collaborator fails to fulfill its responsibilities in a timely manner, or at all, our research, clinical development, manufacturing or commercialization efforts related to that collaboration could be delayed or terminated, or it may be necessary for us to assume responsibility for expenses or activities that would otherwise have been the responsibility of our collaborator.
Any of these occurrences may harm our business, financial condition and prospects significantly. ​ If any of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by any such product, including during any long-term follow-up observation period recommended or required for patients who receive treatment using our products, a number of potentially significant negative consequences could result, including: ​ ● regulatory authorities may withdraw approvals of such product; ​ ● we may be required to recall a product or change the way such product is administered to patients; ​ 66 Table of Contents ● additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product; ​ ● regulatory authorities may require additional warnings on the label, such as a “black box” warning or contraindication; ​ ● we may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or create a medication guide outlining the risks of such side effects for distribution to patients or similar risk management measures; ​ ● the product could become less competitive; ​ ● we could be sued and held liable for harm caused to patients; and ​ ● our reputation may suffer. ​ ​ ​ Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects. ​ Success in preclinical studies or clinical trials may not be indicative of results in future clinical trials. ​ Results from previous preclinical studies or clinical trials are not necessarily predictive of future clinical trial results, and interim results of a clinical trial are not necessarily indicative of final results.
Any of these occurrences may harm our business, financial condition and prospects significantly. ​ 69 Table of Contents If any of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by any such product, including during any long-term follow-up observation period recommended or required for patients who receive treatment using our products, a number of potentially significant negative consequences could result, including: ​ ● regulatory authorities may withdraw approvals of such product; ​ ● we may be required to recall a product or change the way such product is administered to patients; ​ ● additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product; ​ ● regulatory authorities may require additional warnings on the label, such as a “black box” warning or contraindication; ​ ● we may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or create a medication guide outlining the risks of such side effects for distribution to patients or similar risk management measures; ​ ● the product could become less competitive; ​ ● we could be sued and held liable for harm caused to patients; and ​ ● our reputation may suffer. ​ ​ ​ Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects. ​ Success in preclinical studies or clinical trials may not be indicative of results in future clinical trials. ​ Results from previous preclinical studies or clinical trials are not necessarily predictive of future clinical trial results, and interim results of a clinical trial are not necessarily indicative of final results.
Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or up to 4% of the total worldwide annual turnover of the relevant undertaking in the preceding financial year, whichever is higher, and other administrative penalties. ​ Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the U.S.
Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and, among other things, potential fines for noncompliance of up to €20 million or up to 4% of the total worldwide annual turnover of the relevant undertaking in the preceding financial year, whichever is higher, and other administrative penalties. ​ Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the U.S.
The enrollment of patients depends on many factors, including: ● the size and nature of the patient population; ● the patient eligibility criteria defined in the protocol; ● the size of the patient population required for analysis of the trial’s primary endpoints; ● the proximity of patients to study sites; ● the design of the trial or side effects that may arise in development; ● our ability to recruit clinical trial investigators with the appropriate competencies and experience; 65 Table of Contents ● clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new products that may be approved for the indications we are investigating; ● our ability to obtain and maintain patient consents; ● the risk that patients enrolled in clinical trials will drop out of the trials before completion; and ● business interruptions resulting from geopolitical actions, including war and terrorism, or widespread health emergencies, such as the COVID-19 pandemic, or natural disasters including earthquakes, typhoons, floods and fires, or from economic or political instability. ​ In addition, other clinical trials for product candidates that are in the same therapeutic areas as our product candidates or approved products for the same clinical indications (such as Luxturna marketed by Spark Therapeutics, Inc. for the treatment of RPE65-associated retinal disease) may reduce the number and type of patients available to us.
The enrollment of patients depends on many factors, including: ● the size and nature of the patient population; ● the patient eligibility criteria defined in the protocol; ● the size of the patient population required for analysis of the trial’s primary endpoints; ● the proximity of patients to study sites; ● the design of the trial or side effects that may arise in development; 68 Table of Contents ● our ability to recruit clinical trial investigators with the appropriate competencies and experience; ● clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new products that may be approved for the indications we are investigating; ● our ability to obtain and maintain patient consents; ● the risk that patients enrolled in clinical trials will drop out of the trials before completion; and ● business interruptions resulting from geopolitical actions, including war and terrorism, or widespread health emergencies, such as the COVID-19 pandemic, or natural disasters including earthquakes, typhoons, floods and fires, or from economic or political instability. ​ In addition, other clinical trials for product candidates that are in the same therapeutic areas as our product candidates or approved products for the same clinical indications (such as Luxturna marketed by Spark Therapeutics, Inc. for the treatment of RPE65-associated retinal disease) may reduce the number and type of patients available to us.
In addition, if a product receives the first FDA approval of that drug for the indication for which it has orphan designation, the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same disease or condition for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer is unable to assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the rare disease or condition.
In addition, if a product receives the first FDA approval of that drug for the disease or condition for which it has orphan drug designation, the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same disease or condition for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer is unable to assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the rare disease or condition.
We expect that we and our third-party collaborators will be subject to additional risks related to international pharmaceutical operations, including: ​ ● different regulatory requirements for drug and biologic approvals and rules governing drug and biologic commercialization in foreign countries; ​ ● tighter restrictions on privacy and the collection and use of patient data; ​ ● reduced or loss of protection for intellectual property rights; ​ ● foreign reimbursement, pricing and insurance regimes; 81 Table of Contents ​ ● unexpected changes in tariffs, trade barriers and regulatory requirements; ​ ● economic weakness, including inflation, or political instability in particular foreign economies and markets; ​ ● foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; ​ ● business interruptions resulting from geopolitical actions, including war and terrorism, or widespread health emergencies, such as the COVID-19 pandemic, or natural disasters including earthquakes, typhoons, floods and fires, or from economic or political instability; ​ ● greater difficulty with enforcing our contracts; ​ ● potential noncompliance with the FCPA, the Bribery Act and similar anti-bribery and anticorruption laws in other jurisdictions; ​ ● production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and ​ ● workforce uncertainty in countries where labor unrest is more common than in the United States and compliance with tax, employment, immigration and labor laws for employees living or traveling abroad. ​ We have no prior experience in these areas and we may rely on other third parties to help us establish our international commercialization operations.
We expect that we and our third-party collaborators will be subject to additional risks related to international pharmaceutical operations, including: ​ ● different regulatory requirements for drug and biologic approvals and rules governing drug and biologic commercialization in foreign countries; ​ ● tighter restrictions on data privacy and security and the collection and use of patient data; ​ ● reduced or loss of protection for intellectual property rights; ​ ● foreign reimbursement, pricing and insurance regimes; ​ ● unexpected changes in tariffs, trade barriers and regulatory requirements; ​ ● economic weakness, including inflation, or political instability in particular foreign economies and markets; ​ ● foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; ​ ● business interruptions resulting from geopolitical actions, including war and terrorism, or widespread health emergencies, such as the COVID-19 pandemic, or natural disasters including earthquakes, typhoons, floods and fires, or from economic or political instability; ​ ● greater difficulty with enforcing our contracts; ​ ● potential noncompliance with the FCPA, the Bribery Act and similar anti-bribery and anticorruption laws in other jurisdictions; ​ ● production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and 85 Table of Contents ​ ● workforce uncertainty in countries where labor unrest is more common than in the United States and compliance with tax, employment, immigration and labor laws for employees living or traveling abroad. ​ We have no prior experience in these areas and we may rely on other third parties to help us establish our international commercialization operations.
Physician Payments Sunshine Act and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the government information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse midwives), and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; ​ ● analogous U.S. state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private 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 U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; and state and local laws that require the registration of pharmaceutical sales representatives; and ​ ● similar healthcare laws and regulations in the UK, EU and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers. ​ 74 Table of Contents Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
Physician Payments Sunshine Act and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the government information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse midwives), and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; ​ ● analogous U.S. state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private 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 U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; and state and local laws that require the registration of pharmaceutical sales representatives; and ​ ● similar healthcare laws and regulations in the UK, EU and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers. ​ Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
Given the length of time typically needed to develop a new drug from the time it enters Phase 1 clinical trials to when it is approved for treating patients, predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing genetic medicine products.
Given the length of time typically needed to develop a new drug from the time it enters Phase 1 clinical trials to when it is approved for treating patients, if ever, predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing genetic medicine products.
Similar risks apply in foreign jurisdictions. ​ In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, including adverse events of unanticipated severity or frequency, or with our manufacturing processes or third-party manufacturers, or failure to comply with regulatory requirements, may yield various results, including: ​ ● restrictions on manufacturing such products; ​ ● restrictions on the labeling or marketing of a product; ​ ● restrictions on product distribution or use; ​ ● requirements to conduct post-marketing studies or clinical trials; ​ ● warning letters or holds on clinical trials; ​ ● withdrawal of the products from the market; ​ ● refusal to approve pending applications or supplements to approved applications that we submit; ​ ● recall of products; ​ ● fines, restitution or disgorgement of profits or revenues; ​ ● suspension or withdrawal of marketing approvals; ​ ● refusal to permit the import or export of our products; ​ ● product seizure or detention; or 69 Table of Contents ​ ● injunctions or the imposition of civil or criminal penalties. ​ The FDA’s and foreign regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates.
Similar risks apply in foreign jurisdictions. ​ 72 Table of Contents In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, including adverse events of unanticipated severity or frequency, or with our manufacturing processes or third-party manufacturers, or failure to comply with regulatory requirements, may yield various results, including: ​ ● restrictions on manufacturing such products; ​ ● restrictions on the labeling or marketing of a product; ​ ● restrictions on product distribution or use; ​ ● requirements to conduct post-marketing studies or clinical trials; ​ ● warning letters or holds on clinical trials; ​ ● withdrawal of the products from the market; ​ ● refusal to approve pending applications or supplements to approved applications that we submit; ​ ● recall of products; ​ ● fines, restitution or disgorgement of profits or revenues; ​ ● suspension or withdrawal of marketing approvals; ​ ● refusal to permit the import or export of our products; ​ ● product seizure or detention; or ​ ● injunctions or the imposition of civil or criminal penalties. ​ The FDA’s and foreign regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates or significantly increase the cost of such trials, including: ● we may experience changes in regulatory requirements or guidance, or receive feedback from regulatory authorities that requires us to modify the design of our clinical trials; ● clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon development programs; ● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate; ● our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● we or our investigators might have to suspend or terminate clinical trials of our product candidates for various reasons, including non-compliance with regulatory requirements, a finding that our product candidates have undesirable side effects or other unexpected characteristics, or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials of our product candidates may be greater than we anticipate, and we may not have funds to cover the costs; ● the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; ● business interruptions resulting from geopolitical actions, including war and terrorism, or a widespread health emergency, such as the COVID-19 pandemic, or natural disasters including earthquakes, typhoons, floods and fires, or from economic or political instability; and 57 Table of Contents ● any future collaborators that conduct clinical trials may face any of the above issues, and they may conduct clinical trials in ways they view as advantageous to them but that are suboptimal for us.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates or significantly increase the cost of such trials, including: ● we may experience changes in regulatory requirements or guidance, or receive feedback from regulatory authorities that requires us to modify the design of our clinical trials; ● clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon development programs; ● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate; ● our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● we or our investigators might have to suspend or terminate clinical trials of our product candidates for various reasons, including non-compliance with regulatory requirements, a finding that our product candidates have undesirable side effects or other unexpected characteristics, or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials of our product candidates may be greater than we anticipate, and we may not have funds to cover the costs; ● the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; ● business interruptions resulting from geopolitical actions, including war and terrorism, or a widespread health emergency, such as the COVID-19 pandemic, or natural disasters including earthquakes, typhoons, floods and fires, or from economic or political instability; and ● any future collaborators that conduct clinical trials may face any of the above issues, and they may conduct clinical trials in ways they view as advantageous to them but that are suboptimal for us.
The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to: ​ ● the efficacy and potential advantages compared to alternative treatments; ​ ● effectiveness of sales and marketing efforts; ​ ● the cost of treatment in relation to alternative treatments, including any similar generic treatments; ​ ● our ability to offer our product candidates for sale at competitive prices; ​ ● the convenience and ease of administration; ​ ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ​ ● the strength of marketing and distribution support, and publicity concerning our products or competing products and treatments; ​ ● the timing of market introduction of competitive products; ​ ● the availability of third-party coverage and adequate reimbursement; ​ ● product labeling or product insert requirements of the FDA, MHRA, EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling; ​ ● the prevalence and severity of any side effects; and ​ ● any restrictions on the use of our product together with other medications. ​ Because we expect sales of our product candidates, if approved, to generate substantially all of our product revenues for a substantial period, the failure of these product candidates to find market acceptance would harm our business and could require us to seek additional financing. ​ If we are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration with third parties, we may not be successful in commercializing our product candidates or realizing the synergies in the target indications of our programs, even if they are approved. ​ We do not have any infrastructure for the sales, marketing or distribution of our products, and the cost of establishing and maintaining such an organization may exceed the cost-effectiveness of doing so or we may seek collaborative arrangements or external funding to commercialize our product candidates.
The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to: ​ ● the efficacy and potential advantages compared to alternative treatments; ​ ● effectiveness of sales and marketing efforts; ​ ● the cost of treatment in relation to alternative treatments, including any similar generic treatments; ​ ● our ability to offer our product candidates for sale at competitive prices; 83 Table of Contents ​ ● the convenience and ease of administration; ​ ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ​ ● the strength of marketing and distribution support, and publicity concerning our products or competing products and treatments; ​ ● the timing of market introduction of competitive products; ​ ● the availability of third-party coverage and adequate reimbursement; ​ ● product labeling or product insert requirements of the FDA, MHRA, EMA or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling; ​ ● the prevalence and severity of any side effects; and ​ ● any restrictions on the use of our product together with other medications. ​ Because we expect sales of our product candidates, if approved, to generate substantially all of our product revenues for a substantial period, the failure of these product candidates to find market acceptance would harm our business and could require us to seek additional financing. ​ If we are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration with third parties, we may not be successful in commercializing our product candidates or realizing the synergies in the target indications of our programs, even if they are approved. ​ We do not have any infrastructure for the sales, marketing or distribution of our products, and the cost of establishing and maintaining such an organization may exceed the cost-effectiveness of doing so or we may seek collaborative arrangements or external funding to commercialize our product candidates.
The following examples are illustrative: ​ ● others may be able to make products that are the same as or similar to our product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed; ​ ● others, including inventors or developers of our owned or in-licensed patented technologies who may become involved with competitors, may independently develop similar technologies that function as alternatives or replacements for any of our technologies without infringing our intellectual property rights; ​ ● we or our licensors or our other collaboration partners might not have been the first to conceive and reduce to practice the inventions covered by the patents or patent applications that we own, license or will own or license; ​ ● we or our licensors or our other collaboration partners might not have been the first to file patent applications covering certain of the patents or patent applications that we or they own or have obtained a license, or will own or will have obtained a license; ​ ● we or our licensors may fail to meet obligations to the U.S. government with respect to in-licensed patents and patent applications funded by U.S. government grants, leading to the loss of patent rights; ​ ● issued patents that we own or exclusively license may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; and ​ ● our competitors might conduct research and development activities in countries where we do not have patent rights, or in countries where research and development safe harbor laws exist, and then use the 92 Table of Contents information learned from such activities to develop competitive products for sale in our major commercial markets. ​ Our reliance on third parties may require us to share our trade secrets, which increases the possibility that our trade secrets will be misappropriated or disclosed, and confidentiality agreements with employees and third parties may not adequately prevent disclosure of trade secrets and protect other proprietary information. ​ We consider proprietary trade secrets, confidential know-how and unpatented know-how to be important to our business.
The following examples are illustrative: ​ ● others may be able to make products that are the same as or similar to our product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed; ​ ● others, including inventors or developers of our owned or in-licensed patented technologies who may become involved with competitors, may independently develop similar technologies that function as alternatives or replacements for any of our technologies without infringing our intellectual property rights; ​ ● we or our licensors or our other collaboration partners might not have been the first to conceive and reduce to practice the inventions covered by the patents or patent applications that we own, license or will own or license; ​ ● we or our licensors or our other collaboration partners might not have been the first to file patent applications covering certain of the patents or patent applications that we or they own or have obtained a license, or will own or will have obtained a license; ​ ● we or our licensors may fail to meet obligations to the U.S. government with respect to in-licensed patents and patent applications funded by U.S. government grants, leading to the loss of patent rights; ​ ● issued patents that we own or exclusively license may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; and ​ ● our competitors might conduct research and development activities in countries where we do not have patent rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets. ​ Our reliance on third parties may require us to share our trade secrets, which increases the possibility that our trade secrets will be misappropriated or disclosed, and confidentiality agreements with employees and third parties may not adequately prevent disclosure of trade secrets and protect other proprietary information. ​ We consider proprietary trade secrets, confidential know-how and unpatented know-how to be important to our business.
The Notes incur interest, subject to certain provisions therein, at a fluctuating rate per annum equal to 10.00% plus the secured overnight financing rate administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a 1.00% floor. The Note Purchase Agreement matures on August 2, 2026 and is interest-only during the term.
The Notes incur interest, subject to certain provisions therein, at a fluctuating rate per annum equal to 10.00% plus the secured overnight financing rate administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a 1.00% floor. The Notes Purchase Agreement matures on August 2, 2026 and is interest-only during the term.
Among the provisions of the ACA, those of greatest importance to the pharmaceutical and biotechnology industries include the following: ​ ● an annual, non-deductible fee payable by any entity that manufactures or imports certain branded prescription drugs and biologic agents (other than those designated as orphan drugs), which is apportioned among these entities according to their market share in certain government healthcare programs; ​ ● a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; ​ ● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; ​ ● a licensure framework for follow on biologic products; 71 Table of Contents ​ ● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and ​ ● establishment of a Center for Medicare & Medicaid Innovation at the Centers for Medicare & Medicaid Services, or CMS, to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. ​ Since its enactment, there have been judicial, Congressional and executive branch challenges to certain aspects of the ACA.
Among the provisions of the ACA, those of greatest importance to the pharmaceutical and biotechnology industries include the following: ​ ● an annual, non-deductible fee payable by any entity that manufactures or imports certain branded prescription drugs and biologic agents (other than those designated as orphan drugs), which is apportioned among these entities according to their market share in certain government healthcare programs; ​ ● a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; ​ ● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; ​ ● a licensure framework for follow on biologic products; ​ ● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and ​ ● establishment of a Center for Medicare & Medicaid Innovation at the Centers for Medicare & Medicaid Services, or CMS, to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. ​ Since its enactment, there have been judicial, Congressional and executive branch challenges to certain aspects of the ACA.
Some of the policies we currently maintain include general liability, clinical trial liability, employment practices liability, property, auto, workers’ compensation, umbrella, cyber and directors’ and officers’ insurance. Any additional product liability insurance coverage we acquire in the future, may not be sufficient to reimburse us for any expenses or losses we may suffer.
Some of the policies we currently maintain include general liability, clinical product and clinical trial liability, employment practices liability, property, transit, auto, workers’ compensation, umbrella, cyber and directors’ and officers’ insurance. Any additional product liability insurance coverage we acquire in the future may not be sufficient to reimburse us for any expenses or losses we may suffer.
Even with orphan drug designation, we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing pharmaceutical products, which could prevent us from marketing our product candidates if another company is able to obtain orphan drug exclusivity before we do.
Even with orphan drug designation and orphan designation, we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing pharmaceutical products, which could prevent us from marketing our product candidates if another company is able to obtain orphan drug exclusivity before we do.
The process by which we identify product candidates may fail to yield product candidates for clinical development for a number of reasons, including those discussed in these risk factors and also: ● we may not be able to assemble sufficient resources to acquire or discover additional product candidates; ● competitors may develop alternatives that render our potential product candidates obsolete or less attractive; ● potential product candidates we develop may nevertheless be covered by third parties’ patents or other exclusive rights; ● potential product candidates may, on further study, be shown to have harmful side effects, toxicities or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance; 52 Table of Contents ● potential product candidates may not be effective in treating their targeted diseases; ● the market for a potential product candidate may change so that the continued development of that product candidate is no longer reasonable; ● a potential product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; or ● the regulatory pathway for a potential product candidate may be too complex and difficult to navigate successfully or economically.
The process by which we identify product candidates may fail to yield product candidates for clinical development for a number of reasons, including those discussed in these risk factors and also: ● we may not be able to assemble sufficient resources to acquire or discover additional product candidates; ● competitors may develop alternatives that render our potential product candidates obsolete or less attractive; ● potential product candidates we develop may nevertheless be covered by third parties’ patents or other exclusive rights; ● potential product candidates may, on further study, be shown to have harmful side effects, toxicities or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance; ● potential product candidates may not be effective in treating their targeted diseases; ● the market for a potential product candidate may change so that the continued development of that product candidate is no longer reasonable; ● a potential product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; or ● the regulatory pathway for a potential product candidate may be too complex and difficult to navigate successfully or economically.
Our future success and ability to generate product revenue is substantially dependent on our ability to successfully develop, obtain regulatory approval for and successfully commercialize our product candidates. We currently have no products that are approved for commercial sale and may never be able to develop marketable products.
Our future success and ability to generate product revenue is substantially dependent on our ability to successfully develop, manufacture, obtain regulatory approval for and successfully commercialize our product candidates. We currently have no products that are approved for commercial sale and may never be able to develop marketable products.
In addition, the FDA can subsequently approve products with the same principal molecular structural features, in the case of a biologic, for the same condition if the FDA concludes that the later product is safer, more effective, or makes a major contribution to patient care.
In addition, the FDA can subsequently approve products with the same principal molecular structural features, in the case of a biologic, for the same disease or condition if the FDA concludes that the later product is safer, more effective, or makes a major contribution to patient care.
Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. ​ Despite our security measures, our information technology and infrastructure may be vulnerable to cyber-attacks by hackers or internal bad actors, or breached due to employee error, a technical vulnerability, malfeasance or other disruptions that could have a negative impact, including loss or destruction of data (including confidential or critical business information).
Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. ​ Despite our security measures, our IT and infrastructure may be vulnerable to cyber-attacks by hackers or internal bad actors, or breached due to employee error, a technical vulnerability, malfeasance or other disruptions that could have a negative impact, including loss or destruction of data (including confidential or critical business information).
These requirements include submissions of safety and other post-marketing information and reports, establishment registration and drug listing requirements, continued compliance with cGMP and similar requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping and GCP requirements for any clinical trials that we conduct post-approval. ​ The FDA, MHRA and other regulatory authorities closely regulate the post-approval marketing and promotion of genetic therapy medicines to ensure they are marketed only for the approved indications and in accordance with the provisions of the approved labeling.
These requirements include submissions of safety and other post-marketing information and reports, establishment registration and drug listing requirements, continued compliance with GMP and similar requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping and GCP requirements for any clinical trials that we conduct post-approval. ​ The FDA, MHRA and other regulatory authorities closely regulate the post-approval marketing and promotion of genetic therapy medicines to ensure they are marketed only for the approved indications and in accordance with the provisions of the approved labeling.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: ​ ● the possible breach of the manufacturing agreement by the third party, including failure to provide appropriate quantities in a timely manner; ​ ● the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; and ​ ● reliance on the third party for regulatory compliance, quality assurance, safety, and pharmacovigilance and related reporting. ​ We and our third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements that might be required by the FDA, MHRA or EMA.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: ​ ● the possible breach of the manufacturing agreement by the third party, including failure to provide appropriate quantities in a timely manner; ​ ● the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; and ​ ● reliance on the third party for regulatory compliance, quality assurance, safety, and pharmacovigilance and related reporting. ​ We and our third-party manufacturers may not be able to comply with GMP regulations or similar regulatory requirements that might be required by the FDA, MHRA or EMA.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, significant regulatory penalties, and such an event could disrupt our operations, damage our reputation, result in significant expenses in implementing future security measures and cause a loss of confidence in us and our ability to conduct clinical trials, which could adversely affect our reputation and financial results, and delay clinical development of our product candidates. ​ ​ ​ 97 Table of Contents The UK’s withdrawal from the EU has resulted in changes to regulatory requirements and has had and may continue to have a negative effect on global economic conditions, financial markets and our business, which could reduce the price of our shares. ​ Following a national referendum and enactment of legislation by the government of the UK, the UK formally withdrew from the EU on January 31, 2020, commonly referred to as “Brexit”.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, significant regulatory penalties, and such an event could disrupt our operations, damage our reputation, result in significant expenses in implementing future security measures and cause a loss of confidence in us and our ability to conduct clinical trials, which could adversely affect our reputation and financial results, and delay clinical development of our product candidates. ​ The UK’s withdrawal from the EU has resulted in changes to regulatory requirements and has had and may continue to have a negative effect on global economic conditions, financial markets and our business, which could reduce the price of our shares. ​ Following a national referendum and enactment of legislation by the government of the UK, the UK formally withdrew from the EU on January 31, 2020, commonly referred to as “Brexit”.
If we are unable to maintain existing insurance with adequate levels of coverage, any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations. ​ Our employees and independent contractors, including consultants, vendors, and any third parties we may engage in connection with development and commercialization may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could harm our business. ​ Misconduct by our employees and independent contractors, including consultants, vendors, and any third parties we may engage in connection with development and commercialization, could include intentional, reckless or negligent conduct or unauthorized activities that violate: (i) applicable laws and regulations of the FDA, MHRA, EMA and other regulatory or governmental authorities, including those laws that require the reporting of true, complete and accurate information to such authorities; (ii) manufacturing standards; (iii) data privacy, security, fraud and abuse and other healthcare laws and regulations; or (iv) laws that require the reporting of true, complete and accurate financial information and data.
If we are unable to maintain 99 Table of Contents existing insurance with adequate levels of coverage, any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations. ​ Our employees and independent contractors, including consultants, vendors, and any third parties we may engage in connection with development and commercialization may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could harm our business. ​ Misconduct by our employees and independent contractors, including consultants, vendors, and any third parties we may engage in connection with development and commercialization, could include intentional, reckless or negligent conduct or unauthorized activities that violate: (i) applicable laws and regulations of the FDA, MHRA, EMA and other regulatory or governmental authorities, including those laws that require the reporting of true, complete and accurate information to such authorities; (ii) manufacturing standards; (iii) data privacy and security, fraud and abuse and other healthcare laws and regulations; or (iv) laws that require the reporting of true, complete and accurate financial information and data.
While we now have our own plasmid manufacturing capabilities in our Shannon, Ireland facilities, we may also rely on third-party manufacturers from time to time for the manufacture of plasmid used in the production of some of our product candidates.
While we now have our own plasmid manufacturing capabilities in our Shannon, Ireland facilities, we also rely on third-party manufacturers from time to time for the manufacture of plasmid used in the production of some product candidates.
There can be no assurance, however, that the policies and procedures will be followed at all times or effectively detect and prevent violations of the applicable laws by one or more of our employees, consultants, agents, or collaborators and, as a result, we could be subject to fines, penalties, or prosecution. ​ ​ Risks Related to Commercialization ​ 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 therapies that are safer or more advanced or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize any product candidates we may develop. ​ 77 Table of Contents The development and commercialization of new gene therapy products is highly competitive.
There can be no assurance, however, that the policies and procedures will be followed at all times or effectively detect and prevent violations of the applicable laws by one or more of our employees, consultants, agents, or collaborators and, as a result, we could be subject to fines, penalties, or prosecution. ​ Risks Related to Commercialization ​ 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 therapies that are safer or more advanced or effective than ours, which may harm our financial condition and our ability to successfully market or commercialize any product candidates we may develop. ​ The development and commercialization of new gene therapy products is highly competitive.
As a result, it may be difficult or impossible for investors to effect service of process upon us within the United States or other jurisdictions, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. ​ In particular, investors should be aware that there is uncertainty as to whether the courts of the Cayman Islands or any other applicable jurisdictions would recognize and enforce judgments of U.S. courts obtained against us or our directors or management predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or entertain original actions brought in the Cayman Islands or any other applicable jurisdiction’s courts against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. ​ The rights of our shareholders differ from the rights typically offered to shareholders of a U.S. corporation. ​ Our corporate affairs and the rights of holders of ordinary shares are governed by Cayman Islands law, including the provisions of the Cayman Islands Companies Act (as amended), or the Companies Act, the common law of the Cayman Islands and by our memorandum and articles of association.
As a result, it may be difficult or impossible for investors to effect service of process upon us within the United States or other jurisdictions, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. ​ 104 Table of Contents In particular, investors should be aware that there is uncertainty as to whether the courts of the Cayman Islands or any other applicable jurisdictions would recognize and enforce judgments of U.S. courts obtained against us or our directors or management predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or entertain original actions brought in the Cayman Islands or any other applicable jurisdiction’s courts against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. ​ The rights of our shareholders differ from the rights typically offered to shareholders of a U.S. corporation. ​ Our corporate affairs and the rights of holders of ordinary shares are governed by Cayman Islands law, including the provisions of the Cayman Islands Companies Act (as amended), or the Companies Act, the common law of the Cayman Islands and by our memorandum and articles of association.
Moreover, the extent to which a biosimilar, once licensed, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing. ​ If competitors are able to obtain marketing approval for biosimilars referencing our products, our products may become subject to competition from such biosimilars, with the attendant competitive pressure and consequences. ​ Risks Related to Our Dependence on Third Parties ​ If our cGMP and GMP manufacturing facilities are unable to supply our product candidates for all of our current preclinical, clinical and potential commercial needs, we will be forced to seek out third-party manufacturers.
Moreover, the extent to which a biosimilar, once licensed, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing. ​ If competitors are able to obtain marketing approval for biosimilars referencing our products, our products may become subject to competition from such biosimilars, with the attendant competitive pressure and consequences. ​ Risks Related to Our Dependence on Third Parties ​ If our GMP manufacturing facilities are unable to supply our product candidates for all of our current preclinical, clinical and potential commercial needs, including our third party supply obligations, we will be forced to seek out third-party manufacturers.
In addition, regardless of merit or eventual outcome, product liability claims may result in: ​ ● impairment of our business reputation and significant negative media attention; ​ ● withdrawal of participants from our clinical trials; ​ ● significant time, costs and diversion of management resources to defend the related litigation; ​ ● substantial monetary awards to patients or other claimants; ​ ● inability to commercialize our product candidates; ​ ● product recalls, withdrawals or labeling, marketing or promotional restrictions; ​ ● decreased demand for our product candidates, if approved for commercial sale; and ​ ● loss of revenue. ​ 95 Table of Contents Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities. ​ We do not carry insurance for all categories of risk that our business may encounter.
In addition, regardless of merit or eventual outcome, product liability claims may result in: ​ ● impairment of our business reputation and significant negative media attention; ​ ● withdrawal of participants from our clinical trials; ​ ● significant time, costs and diversion of management resources to defend the related litigation; ​ ● substantial monetary awards to patients or other claimants; ​ ● inability to commercialize our product candidates; ​ ● product recalls, withdrawals or labeling, marketing or promotional restrictions; ​ ● decreased demand for our product candidates, if approved for commercial sale; and ​ ● loss of revenue. ​ Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities. ​ We do not carry insurance for all categories of risk that our business may encounter.
As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. ​ Third parties may assert claims against us alleging infringement of their patents and proprietary rights, or we may need to become involved in lawsuits to defend or enforce our patents, either of which could result in substantial costs or loss of productivity, delay or prevent the development and commercialization of our product candidates, prohibit our use of proprietary technology or sale of products or put our patents and other proprietary rights at risk. ​ Our commercial success depends, in part, upon our ability to develop, manufacture, market and sell our product candidates without alleged or actual infringement, misappropriation or other violation of the patents and proprietary rights of third parties.
As a result, our owned 91 Table of Contents and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. ​ Third parties may assert claims against us alleging infringement of their patents and proprietary rights, or we may need to become involved in lawsuits to defend or enforce our patents, either of which could result in substantial costs or loss of productivity, delay or prevent the development and commercialization of our product candidates, prohibit our use of proprietary technology or sale of products or put our patents and other proprietary rights at risk. ​ Our commercial success depends, in part, upon our ability to develop, manufacture, market and sell our product candidates without alleged or actual infringement, misappropriation or other violation of the patents and proprietary rights of third parties.
The Note Purchase Agreement also contains various restrictions and covenants, including, among other things, covenants regarding the incurrence of additional indebtedness, limitations on liens, limitations on certain investments, limitations on making distributions, dividends and other payments, mergers, consolidations and acquisitions, dispositions of assets, maintenance of at least $3.0 million in a U.S. bank account, transactions with affiliates, changes to governing documents, changes to certain agreements and leases and changes in control.
The Notes Purchase Agreement also contains various restrictions and covenants, including, among other things, covenants regarding the incurrence of additional indebtedness, limitations on liens, limitations on certain investments, limitations on making distributions, dividends and other payments, mergers, consolidations and acquisitions, dispositions of assets, maintenance of at least $3.0 million in a U.S. bank account, transactions with affiliates, changes to governing documents, changes to certain agreements and leases and changes in control.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid, other U.S. federal healthcare programs or healthcare programs in other jurisdictions, integrity oversight and 96 Table of Contents reporting obligations to resolve allegations of non-compliance, individual imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations. ​ Our business and operations may suffer in the event of system failures and our systems and those of our business partners and service providers may be vulnerable to cybersecurity risks. ​ Our information technology systems, including manufacturing systems, as well as those of our business partners and service providers, are vulnerable to damage from computer viruses, unauthorized access, hardware and software failures, natural disasters, terrorism, war and telecommunication and electrical failures.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid, other U.S. federal healthcare programs or healthcare programs in other jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, individual imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations. ​ Our business and operations may suffer in the event of system failures and our systems and those of our business partners and service providers may be vulnerable to cybersecurity risks. ​ Our information technology, or IT, systems, including manufacturing systems, as well as those of our business partners and service providers, are vulnerable to damage from computer viruses, unauthorized access, hardware and software failures, natural disasters, terrorism, war and telecommunication and electrical failures.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may: ● incur unplanned costs; ● be delayed in obtaining marketing approval for our product candidates or not obtain marketing approval at all; ● obtain marketing approval in some countries and not in others; ● obtain marketing approval for indications or patient populations that are not as broad as intended or desired; ● obtain marketing approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings; ● be subject to additional post-marketing testing requirements; or ● have the product removed from the market after obtaining marketing approval.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may: ● incur unplanned costs; 60 Table of Contents ● be delayed in obtaining marketing approval for our product candidates or not obtain marketing approval at all; ● obtain marketing approval in some countries and not in others; ● obtain marketing approval for indications or patient populations that are not as broad as intended or desired; ● obtain marketing approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings; ● be subject to additional post-marketing testing requirements; or ● have the product removed from the market after obtaining marketing approval.
Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval, which could negatively impact our business, financial condition, results of operations and prospects. ​ The regulatory approval processes of the FDA, MHRA, competent authorities in the EU and other regulatory authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed. ​ The time required to obtain approval by the FDA, MHRA, European Commission and other regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval, which could negatively impact our business, financial condition, results of operations and prospects. ​ 70 Table of Contents The regulatory approval processes of the FDA, MHRA, competent authorities in the EU and other regulatory authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed. ​ The time required to obtain approval by the FDA, MHRA, European Commission and other regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ​ 73 Table of Contents ● the U.S. federal civil and criminal false claims and civil monetary penalties laws, including the civil False Claims Act, which, among other things, impose criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; ​ ● the U.S. federal civil and criminal false claims and civil monetary penalties laws, including the civil False Claims Act, which, among other things, impose criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government.
In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents, and the holders of any such patents may be able to prohibit our use of those compositions, formulations, methods of treatment, prevention or use or other technologies, effectively blocking our ability to develop and commercialize the applicable product candidate until such patent expires or is finally determined to be invalid or unenforceable or unless we obtained a license. 88 Table of Contents ​ In addition, defending such claims would cause us to incur substantial expenses and, if we are not successful in defending such claims, it could cause us to pay substantial damages if we are found to be infringing a third party’s patent rights.
In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents, and the holders of any such patents may be able to prohibit our use of those compositions, formulations, methods of treatment, prevention or use or other technologies, effectively blocking our ability to develop and commercialize the applicable product candidate until such patent expires or is finally determined to be invalid or unenforceable or unless we obtained a license. ​ In addition, defending such claims would cause us to incur substantial expenses and, if we are not successful in defending such claims, it could cause us to pay substantial damages if we are found to be infringing a third party’s patent rights.
As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. ​ ​ ​ 91 Table of Contents If we do not obtain patent term extension in the United States under the Hatch-Waxman Act and in foreign countries under similar legislation, thereby potentially extending the term of marketing exclusivity for our product candidates, our business may be harmed. ​ In the United States, a patent that covers an FDA-approved drug or biologic may be eligible for a term extension designed to restore the period of the patent term that is lost during the premarket regulatory review process conducted by the FDA.
As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. ​ If we do not obtain patent term extension in the United States under the Hatch-Waxman Act and in foreign countries under similar legislation, thereby potentially extending the term of marketing exclusivity for our product candidates, our business may be harmed. ​ In the United States, a patent that covers an FDA-approved drug or biologic may be eligible for a term extension designed to restore the period of the patent term that is lost during the premarket regulatory review process conducted by the FDA.
In addition, the government may assert that a claim including items and services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; ​ ● the U.S. federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes which prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services.
In addition, the government may assert that a claim including items and services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; ​ ● the U.S. federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes which prohibit, among other things, knowingly and willfully 77 Table of Contents executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services.
These negative impacts could include amongst others a decrease in foreign direct investment in the UK, an increase of our costs, disruption of our supply chains, restrictions on 98 Table of Contents our ability to access capital and depression on economic activity or economic instability, which could in turn lead to a reduction in asset valuations, currency exchange rates and credit ratings. ​ In addition, the TCA has imposed additional restrictions on the free movement of people between the UK and the EU, which could have a material adverse effect on us, since we compete in these jurisdictions for well qualified employees in all aspects of our business.
These negative impacts could include amongst others a decrease in foreign direct investment in the UK, an increase of our costs, disruption of our supply chains, restrictions on our ability to access capital and depression on economic activity or economic instability, which could in turn lead to a reduction in asset valuations, currency exchange rates and credit ratings. ​ In addition, the TCA has imposed additional restrictions on the free movement of people between the UK and the EU, which could have a material adverse effect on us, since we compete in these jurisdictions for well qualified employees in all aspects of our business.
Under the terms of the Protocol on Ireland and Northern Ireland, provisions of the CTR which relate to the manufacture and import of investigational medicinal products and auxiliary medicinal products currently apply in Northern Ireland.
Under the terms of the Protocol on Ireland and Northern Ireland, provisions of the (EU) CTR which relate to the manufacture and import of investigational medicinal products and auxiliary medicinal products currently apply in Northern Ireland.
Although, to our knowledge, we have not experienced any such material security breach to date, we may experience cybersecurity incidents such as malware infections, ransomware, phishing attempts, thefts of personal, confidential, proprietary or other critical business information and other attempts at compromising our information technology that are typical for a company of our size in our market.
Although, to our knowledge, we have not experienced any such material security breach to date, we may experience cybersecurity incidents such as malware infections, ransomware, phishing attempts, thefts of personal, confidential, proprietary or other critical business information and other attempts at compromising our IT that are typical for a company of our size in our market.
The market price for our ordinary shares may be influenced by many factors, including: ​ ● the success of competitive products or technologies; ​ ● actual or expected changes in our growth rate relative to our competitors; ​ ● results of clinical trials of our product candidates or those of our competitors; ​ ● developments related to our existing or any future collaborations; ​ ● regulatory or legal developments in the United States and other countries; ​ ● development of new product candidates that may address our markets and make our product candidates less attractive; ​ ● changes in physician, hospital or healthcare provider practices that may make our product candidates less useful; ​ ● announcements by us, our partners or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; ​ ● developments or disputes concerning patent applications, issued patents or other proprietary rights; ​ ● the recruitment or departure of key personnel; ​ ● the level of expenses related to any of our product candidates or clinical development programs; ​ ● failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; ​ ● the results of our efforts to discover, develop, acquire or in-license additional product candidates or products; ​ 99 Table of Contents ● actual or expected changes in estimates as to financial results, development timelines, recommendations by securities analysts or shifting investor perceptions; ​ ● variations in our financial results or those of companies that are perceived to be similar to us; ​ ● changes in the structure of healthcare payment systems; ​ ● market conditions in the pharmaceutical and biotechnology sectors; ​ ● general economic, industry and market conditions; ​ ● changes in accounting principles; and ​ ● the other factors described in this “Item 1A.
The market price for our ordinary shares may be influenced by many factors, including: ​ ● the success of competitive products or technologies; ​ ● actual or expected changes in our growth rate relative to our competitors; ​ ● results of clinical trials of our product candidates or those of our competitors; ​ ● developments related to our existing or any future collaborations; ​ ● regulatory or legal developments in the United States and other countries; ​ 102 Table of Contents ● development of new product candidates that may address our markets and make our product candidates less attractive; ​ ● changes in physician, hospital or healthcare provider practices that may make our product candidates less useful; ​ ● announcements by us, our partners or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; ​ ● the impact of any potential strategic transactions related to our assets; ​ ● developments or disputes concerning patent applications, issued patents or other proprietary rights; ​ ● the recruitment or departure of key personnel; ​ ● the level of expenses related to any of our product candidates or clinical development programs; ​ ● failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; ​ ● the results of our efforts to discover, develop, acquire or in-license additional product candidates or products; ​ ● actual or expected changes in estimates as to financial results, development timelines, recommendations by securities analysts or shifting investor perceptions; ​ ● variations in our financial results or those of companies that are perceived to be similar to us; ​ ● changes in the structure of healthcare payment systems; ​ ● market conditions in the pharmaceutical and biotechnology sectors; ​ ● general economic, industry and market conditions; ​ ● changes in accounting principles; and ​ ● the other factors described in this “Item 1A.
We are not permitted to market our Most Advanced Product Candidates in the United States until they receive approval of a biologics license application, or BLA, from the FDA, we cannot market them in the UK or EU until we receive approval for an MA, from the MHRA or European Commission, respectively, and we cannot market them in other countries until we receive any other required regulatory approval in those countries.
We are not permitted to market our product candidates in the United States until they receive approval of a biologics license application, or BLA, from the FDA, we cannot market them in the UK or EU until we receive approval for an MA, from the MHRA or European Commission, respectively, and we cannot market them in other countries until we receive any other required regulatory approval in those countries.
Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, 83 Table of Contents injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocations, seizures or recalls of product candidates or medicines, operating restrictions, and criminal prosecutions, any of which could adversely affect supplies of our candidates and harm our business, financial condition, results of operations, and prospects. ​ Any therapies that we may develop may compete with other product candidates and products for access to manufacturing facilities.
Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocations, seizures or recalls of product candidates or medicines, operating restrictions, and criminal prosecutions, any of which could adversely affect supplies of our candidates and harm our business, financial condition, results of operations, and prospects. ​ Any therapies that we may develop may compete with other product candidates and products for access to manufacturing facilities.
In addition, the Note Purchase Agreement prohibits us from paying dividends during its term and the terms of existing and future financing agreements may also preclude us from paying dividends. As a result, capital appreciation, if any, of our ordinary shares would be your sole source of gain on an investment in our ordinary shares for the foreseeable future.
In addition, the Notes Purchase Agreement prohibits us from paying dividends during its term and the terms of existing and future financing agreements may also preclude us from paying dividends. As a result, capital appreciation, if any, of our ordinary shares would be your sole source of gain on an investment in our ordinary shares for the foreseeable future.
Most healthcare providers, including research institutions and other vendors from which we may obtain patient health information, are subject to privacy and security regulations promulgated under HIPAA. We do not believe that we are currently acting as a covered entity or business associate under HIPAA and thus are not directly subject to its requirements or penalties.
Most healthcare providers, including research institutions and other vendors from which we may obtain health-related information, are subject to privacy and security regulations promulgated under HIPAA. We do not believe that we are currently acting as a covered entity or business associate under HIPAA and thus are not directly subject to its requirements or penalties.
If we identify one or more material weaknesses or determine we have inadequate internal controls, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. ​ 105 Table of Contents If securities or industry analysts cease to publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our ordinary shares, our share price and trading volume could decline. ​ The trading market for our ordinary shares relies in part on the research and reports that industry or securities analysts publish about us or our business.
If we identify one or more material weaknesses or determine we have inadequate internal controls, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. ​ If securities or industry analysts cease to publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our ordinary shares, our share price and trading volume could decline. ​ The trading market for our ordinary shares relies in part on the research and reports that industry or securities analysts publish about us or our business.
A sponsor may seek approval of its product candidate under programs designed to accelerate the FDA’s review and approval of new drugs and biological products that meet certain criteria. For example, the FDA has a Fast Track designation program that is intended to expedite or facilitate the process for reviewing new products that meet certain criteria.
A sponsor may seek approval of its product candidate under programs designed to accelerate the FDA’s review and approval of drugs and biological products that meet certain criteria. For example, the FDA has a Fast Track designation program that is intended to expedite or facilitate the process for reviewing product candidates that meet certain criteria.
All entities involved in the preparation of therapeutics for clinical trials or commercial sale, including our existing contract manufacturers for components of our product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with cGMP.
All entities involved in the preparation of therapeutics for clinical trials or commercial sale, including our existing contract manufacturers for components of our product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with GMP.
Additionally, if environmental regulations are enacted that restrict our ability to use one or more of the materials or compounds necessary to manufacture our product candidates, and we are unable to find suitable alternatives or such alternatives require additional testing or will 76 Table of Contents extend the manufacturing timeline, then we may be unable to manufacture our product candidates in a timely manner, or at all. ​ We may be subject to environmental liability inherent in our current and historical activities, including liability relating to releases of or exposure to hazardous or biological materials.
Additionally, if environmental regulations are enacted that restrict our ability to use one or more of the materials or compounds necessary to manufacture our product candidates, and we are unable to find suitable alternatives or such alternatives require additional testing or will extend the manufacturing timeline, then we may be unable to manufacture our product candidates in a timely manner, or at all. ​ We may be subject to environmental liability inherent in our current and historical activities, including liability relating to releases of or exposure to hazardous or biological materials.
Even if we receive approval to market our Most Advanced Product Candidates from the FDA, MHRA or other regulatory bodies, we cannot be certain that our product candidates will be successfully commercialized by us or our collaborators, widely accepted in the marketplace or more effective than other commercially available alternatives.
Even if we receive approval to market our product candidates from the FDA, MHRA or other regulatory bodies, we cannot be certain that our product candidates will be successfully commercialized by us or our collaborators, widely accepted in the marketplace or more effective than other commercially available alternatives.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could 93 Table of Contents result in substantial costs and diversion of resources and could adversely impact our financial condition or results of operations. ​ We may need to license or acquire additional intellectual property from third parties, and such intellectual property may not be available or may not be available on commercially reasonable terms. ​ The growth of our business may depend in part on our ability to acquire or in-license additional proprietary rights.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our financial condition or results of operations. ​ We may need to license or acquire additional intellectual property from third parties, and such intellectual property may not be available or may not be available on commercially reasonable terms. ​ The growth of our business may depend in part on our ability to acquire or in-license additional proprietary rights.
If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of any product we develop will be unrealized. ​ 68 Table of Contents Even if we receive regulatory approval of one or more of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates.
If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of any product we develop will be unrealized. ​ Even if we receive regulatory approval of one or more of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates.
If our third-party service providers do not successfully carry out their contractual duties or obligations or fail to meet 85 Table of Contents expected deadlines, or if the quality or accuracy of the preclinical or clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for any other reasons, our preclinical studies or clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize our product candidates.
If our third-party service providers do not successfully carry out their contractual duties or obligations or fail to meet expected deadlines, or if the quality or accuracy of the preclinical or clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for any other reasons, our preclinical studies or clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize our product candidates.
Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business. ​ Changes in patent laws or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect our product candidates. ​ Obtaining and enforcing patents in the biotechnology and genetic medicine industries involve both technological complexity and legal complexity.
Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business. ​ 93 Table of Contents Changes in patent laws or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect our product candidates. ​ Obtaining and enforcing patents in the biotechnology and genetic medicine industries involve both technological complexity and legal complexity.
We may realize losses in the fair value of certain of our investments or a complete loss of these investments if the credit markets tighten, which would have an adverse effect on our results of operations, liquidity and financial condition. ​ We incur substantial costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives and corporate governance practices. ​ As a public company, and particularly if we no longer qualify as an emerging growth company and smaller reporting company in the future, we incur and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company.
We may realize losses in the fair value of certain of our investments or a complete loss of these investments if the credit markets tighten, which would have an adverse effect on our results of operations, liquidity and financial condition. ​ We incur substantial costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives and corporate governance practices. ​ As a public company, and particularly since we no longer qualify as an emerging growth company and if we no longer qualify as a smaller reporting company or a non-accelerated filer in the future, we incur and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company.
Any such changes in tax laws, regulations and treaties, or the interpretation thereof, tax policy initiatives and reforms under consideration and the practices of tax authorities in jurisdictions in which we operate could adversely affect our tax position, including our effective tax rate or tax payments. ​ ​ ​ 103 Table of Contents We have significant U.S. federal and state net operating losses, or NOLs, and UK carryforward tax losses which we may not be able to realize or which may be restricted under applicable law.
Any such changes in tax laws, regulations and treaties, or the interpretation thereof, tax policy initiatives and reforms under consideration and the practices of tax authorities in jurisdictions in which we operate could adversely affect our tax position, including our effective tax rate or tax payments. ​ We have significant U.S. federal and state net operating losses, or NOLs, and UK carryforward tax losses which we may not be able to realize or which may be restricted under applicable law.
Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. ​ Our current and anticipated future dependence upon others for the manufacture of any product candidates we may develop or any components required for the manufacture of our product candidates may adversely affect our future profit margins and our ability to commercialize any product candidates that receive marketing approval on a timely and competitive basis. ​ We have in the past, and may in the future, collaborate with third parties for the development, manufacture and commercialization of our product candidates.
Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. ​ Our current and anticipated future dependence upon others for the manufacture of any product candidates we may develop or any components required for the manufacture of our product candidates may adversely affect our future profit margins and our ability to commercialize any product candidates that receive marketing approval on a timely and competitive basis. ​ 87 Table of Contents We have in the past, and may in the future, collaborate with third parties for the development, manufacture and commercialization of our product candidates.
If, owing to the restriction or perceived restriction of personal data transfers, we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results. ​ Further, we are subject to the UK data protection regime, which imposes separate but similar obligations to those under the GDPR and comparable penalties, including fines of up to £17.5 million or 4% of a noncompliant company’s global annual revenue for the preceding financial year, whichever is greater.
If, owing to the restriction or perceived restriction of personal data transfers, we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results. ​ Further, we are subject to the UK GDPR, which imposes separate but similar obligations to those under the GDPR and comparable penalties, including fines of up to £17.5 million or 4% of a noncompliant undertaking’s global annual revenue for the preceding financial year, whichever is greater.
As a result, the procedures and standards applied to gene therapy products and cell therapy products may be applied to any gene therapy product candidate we may develop, but that remains uncertain at this point. ​ Post Brexit, MAAs for ATMPs in Great Britain are regulated nationally and assessed in accordance with the general provisions in place for the licensing of medicines, taking the specific requirements for this group of medicines into account.
As a result, the procedures and standards applied to gene therapy products and cell therapy products may be applied to any gene therapy product candidate we may develop, but that remains uncertain at this point. ​ Post Brexit, MAAs for ATMPs in Great Britain are regulated nationally and assessed in accordance with the general provisions in place for the licensing of medicines, taking the specific requirements for this group of medicines into 57 Table of Contents account.
Under such circumstances, trade secrets and confidential know-how can be difficult to maintain as confidential. ​ To protect this type of information against disclosure or appropriation by competitors, our policy is to require our employees, consultants, contractors and advisors to enter into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with us prior to beginning research or disclosing proprietary information.
Under such circumstances, trade secrets and confidential know-how can be difficult to maintain as confidential. ​ To protect this type of information against disclosure or appropriation by competitors, our policy is to require our employees, consultants, contractors and advisors to enter into confidentiality agreements and, if applicable, material 96 Table of Contents transfer agreements, consulting agreements or other similar agreements with us prior to beginning research or disclosing proprietary information.
If we are unable to continue to attract and retain high quality personnel, our ability to develop and commercialize product candidates will be limited. ​ Potential product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of any products that we may develop. ​ The use of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims.
If we are unable to continue to attract and retain high quality personnel, our ability to develop and commercialize product candidates will be limited. ​ 98 Table of Contents Potential product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of any products that we may develop. ​ The use of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims.
In addition, exclusive marketing rights in the United States and the EU may be unavailable if we seek approval for an indication broader than the orphan-designated indication or may be lost in the United States or EU if the FDA or foreign authorities later determine that the request for designation was materially defective or if we are unable to assure sufficient quantities of the drug to meet the needs of patients with the rare disease or condition following approval.
In addition, exclusive marketing rights in the United States and the EU may be unavailable if we seek approval for a disease or condition broader than the orphan drug-designated and orphan-designated disease or condition or may be lost in the United States or EU if the FDA or foreign authorities later determine that the request for designation was materially defective or if we are unable to assure sufficient quantities of the drug to meet the needs of patients with the rare disease or condition following approval.
Further, even if we obtain orphan drug exclusivity, that exclusivity may not effectively protect our product candidates from competition because different biologics with different active principal molecular structural features can be approved for the same condition.
Further, even if we obtain orphan drug exclusivity, that exclusivity may not effectively protect our product candidates from competition because different biologics with different active principal molecular structural features can be approved for the same disease or condition.
These products may compete with our product candidates, and our or our licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. ​ The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws or regulations in the United States, the UK and the EU, and many companies have encountered significant difficulties in protecting and defending proprietary rights in such jurisdictions.
These products may compete with our product candidates, and our or our licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. ​ 94 Table of Contents The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws or regulations in the United States, the UK and the EU, and many companies have encountered significant difficulties in protecting and defending proprietary rights in such jurisdictions.
Similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosure, are exempt from the auditor attestation requirements of Section 404, and have certain other reduced disclosure obligations, including, among other things, not being required to provide selected financial data, supplemental financial information or risk factors. ​ We may choose to take advantage of some, but not all, of the available exemptions for emerging growth companies and smaller reporting companies.
Smaller reporting companies are able to provide simplified executive compensation disclosure, are exempt from the auditor attestation requirements of Section 404, and have certain other reduced disclosure obligations, including, among other things, not being required to provide selected financial data, supplemental financial information or risk factors. ​ We may choose to take advantage of some, but not all, of the available exemptions for smaller reporting companies.
It is possible that the FDA may refuse to accept for substantive review any BLAs, or the MHRA or EMA any of our MAAs, that we submit for our product candidates or may conclude after review of our data that our application is insufficient to obtain marketing approval of our product candidates. ​ Prior to obtaining approval to commercialize a product candidate in the United States, the UK, the EU or elsewhere, we or our collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA, MHRA, EMA or foreign regulatory agencies, that such product candidates are safe and effective for their intended uses.
It is possible that the FDA may refuse to accept for substantive review any BLAs, or the MHRA or EMA any of our MAAs, that we submit for our product candidates or may conclude after review of our data that our application is insufficient to obtain marketing approval of our product candidates. ​ Prior to obtaining approval to commercialize a product candidate in the United States, the UK, the EU or elsewhere, we or our collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA, MHRA, EMA or foreign regulatory agencies, that such product candidates are safe and effective for their intended uses, or with respect to biologics in the United States, that such product candidates are safe, pure, and potent for their intended uses.
The resulting reduction in revenue from applicable products could be substantial. ​ Our proprietary rights may not adequately protect our technologies and product candidates, and do not necessarily address all potential threats to our competitive advantage. ​ The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage.
The resulting reduction in revenue from applicable products could be substantial. ​ 95 Table of Contents Our proprietary rights may not adequately protect our technologies and product candidates, and do not necessarily address all potential threats to our competitive advantage. ​ The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage.
The regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.
Regulatory agencies may also require additional studies if a new manufacturer is relied upon for clinical or commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.
We currently contract with third parties for the manufacture of plasmid used in producing our product candidates.
We currently contract with third parties for the manufacture of plasmid used in producing product candidates.
Adverse events in our clinical trials, even if not ultimately attributable to our product candidates, and the resulting publicity could result in increased governmental regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates or the halting of clinical trials, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.
Adverse events in our clinical trials, even if not ultimately attributable to our product candidates, and the resulting publicity could result in increased governmental regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates or the halting of clinical trials, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product 63 Table of Contents candidates.
We expect to experience pricing pressures in connection with the sale of our product candidates due to the trend toward managed health care, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and biologics and surgical 79 Table of Contents procedures and other treatments, has become intense.
We expect to experience pricing pressures in connection with the sale of our product candidates due to the trend toward managed health care, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and biologics and surgical procedures and other treatments, has become intense.
If we are unable to continue to attract and retain high-quality personnel and consultants, the rate and success at which we can discover and develop product candidates and operate our business will be limited. ​ ​ 94 Table of Contents Our future success depends on our ability to retain our key personnel and to attract, retain and motivate qualified personnel. ​ Our industry has experienced a high rate of turnover of management personnel in recent years.
If we are unable to continue to attract and retain high-quality personnel and consultants, the rate and success at which we can discover and develop product candidates and operate our business will be limited. ​ Our future success depends on our ability to retain our key personnel and to attract, retain and motivate qualified personnel. ​ Our industry has experienced a high rate of turnover of management personnel in recent years.
In 2017, the FDA approved the first gene treatment for RPE65-associated retinal disease, Luxturna, a commercially available product developed by Spark Therapeutics, Inc., which was purchased by Roche. There are a number of other companies developing ocular gene therapy products, including Applied Genetic Technologies Corporation, and 4D Molecular Therapeutics, Inc.
In 2017, the FDA approved the first gene treatment for RPE65-associated retinal disease, Luxturna, a commercially available product developed by Spark Therapeutics, Inc., which was purchased by Roche. There are a number of other companies 81 Table of Contents developing ocular gene therapy products, including Applied Genetic Technologies Corporation, and 4D Molecular Therapeutics, Inc.
Together these provisions may make more difficult the removal of management and may 101 Table of Contents discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our ordinary shares. ​ There may be difficulties in enforcing foreign judgments against our management or us. ​ Certain of our directors and management reside outside the United States.
Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our ordinary shares. ​ There may be difficulties in enforcing foreign judgments against our management or us. ​ Certain of our directors and management reside outside the United States.
Our obligations under the Note Purchase Agreement are secured by our London, UK and Shannon, Ireland manufacturing facilities, $3.0 million of our cash and the bank accounts of the Subsidiary Guarantors, and the issued and outstanding equity interests of the Subsidiary Guarantors.
Our obligations under the Notes Purchase Agreement are secured by our London, UK and Shannon, Ireland manufacturing facilities, $3.0 million of our cash and the bank accounts of the Subsidiary Guarantors, and the issued and outstanding equity interests of the Subsidiary Guarantors.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditionally, we lease an 11,306 square foot office facility located at 34-38 Provost Street, London, United Kingdom and 6,679 square feet of laboratory facilities at 15 Ebenezer Street, London, United Kingdom. The office space lease terminates on September 8, 2029 and the laboratory leases terminate on May 24, 2027.
Biggest changeWe entered into a lease for each property providing for a long leasehold interest that expires in 2211. Additionally, we lease an 11,306 square foot office facility located at 34-38 Provost Street, London, United Kingdom and 6,679 square feet of laboratory facilities at 15 Ebenezer Street, London, United Kingdom.
ITEM 2. PROPERTIES Our principal office is located at 450 E as t 29th Street, New York, New York, USA, where we lease 22,721 square feet of office and laboratory space. We lease this office space under a lease that terminates on October 31, 2026.
ITEM 2. PROPERTIES Our principal office is located at 450 East 29th Street, New York, New York, USA, where we lease 22,721 square feet of office and laboratory space. We lease this office space under a lease that terminates on October 31, 2026.
We also own a long leasehold interest in the ground rights where our 29,000 square foot manufacturing facility is located, at 92 Britannia Walk, London, United Kingdom. The long leasehold interest expires in 2126, and there is no facility rent due.
We own a long leasehold interest in the ground rights where our 29,000 square foot GMP viral vector manufacturing facility is located, at 92 Britannia Walk, London, United Kingdom. The long leasehold interest expires in 2126, and there is no facility rent due.
In January 2021, we completed the acquisition of the buildings for our second, large scale cGMP viral vector manufacturing facility and our first cGMP plasmid and DNA production facility located in Buildings 2 and 3, Block K, Airport Avenue, Shannon Free Zone, Shannon, Ireland. The campus encompasses an aggregate of 150,000 square feet.
We also own the buildings housing our second, large scale GMP viral vector manufacturing facility and our first GMP plasmid and DNA production facility located in Buildings 2 and 3, Block K, Airport Avenue, Shannon Free Zone, Shannon Ireland. The Shannon campus encompasses an aggregate of 150,000 square feet.
We also entered into a lease for each property providing for a long leasehold interest that expires in 2211. ITEM 3. LEGAL PROCEEDINGS We are not subject to any material legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 107 Table of Contents PART II
The office space lease terminates on September 8, 2029 and the laboratory leases terminate on May 24, 2027. ITEM 3. LEGAL PROCEEDINGS We are not subject to any material legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 111 Table of Contents PART II
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We also lease 10,126 square feet of office, laboratory and storage facilities at Paalbergweg 2-4, Amsterdam, Netherlands. The lease terminates on March 30, 2031.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities On November 9, 2022, we entered into a securities purchase agreement with Johnson and Johnson Innovation – JJDC, Inc., the investment arm of Johnson and Johnson (“JJDC”), pursuant to which we, in a private placement, agreed to issue and sell to JJDC an aggregate of 3,742,514 ordinary shares at a purchase price of $6.68 per share for gross proceeds of approximately $25.0 million. ​ The ordinary shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.
Biggest changeRecent Sales of Unregistered Securities On October 30, 2023, we entered into the Investment Agreement with Sanofi Foreign Participations, and solely for the limited purposes set forth therein, Sanofi, pursuant to which we, in a private placement, issued an aggregate of 4.0 million ordinary shares of the Company at a purchase price of $7.50 per share for gross proceeds of $30.0 million. ​ The ordinary shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.
In addition, the Note Purchase Agreement prohibits us from paying dividends during its term and the terms of existing and future financing agreements may also preclude us from paying dividends.
In addition, the Notes Purchase Agreement prohibits us from paying dividends during its term and the terms of existing and future financing agreements may also preclude us from paying dividends.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our ordinary shares trade on the Nasdaq Global Select Market under the symbol “MGTX.” Holders of Record As of March 8, 2023, there were 55 holders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our ordinary shares trade on the Nasdaq Global Select Market under the symbol “MGTX.” Holders of Record As of February 29, 2024, there were 52 holders of record.

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults of Operations Comparison of the Years Ended December 31, 2022 and 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Change ​ ​ (in thousands) License revenue - related party ​ $ 15,920 ​ $ 37,701 ​ $ (21,781) Operating expenses: ​ ​ ​ ​ ​ ​ General and administrative ​ ​ 46,550 ​ ​ 43,765 ​ ​ 2,785 Research and development ​ 85,725 ​ 66,694 ​ 19,031 Total operating expenses ​ 132,275 ​ 110,459 ​ 21,816 Loss from operations ​ (116,355) ​ (72,758) ​ (43,597) Other non-operating income (expense) ​ ​ ​ ​ ​ ​ Foreign currency loss ​ (9,452) ​ (6,293) ​ (3,159) Interest income ​ 777 ​ 212 ​ 565 Interest expense ​ (4,946) ​ (288) ​ (4,658) Fair value adjustments ​ ​ 361 ​ (434) ​ 795 Net loss ​ ​ (129,615) ​ ​ (79,561) ​ ​ (50,054) Other comprehensive income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation gain ​ ​ 8,718 ​ ​ 2,226 ​ ​ 6,492 Comprehensive loss ​ $ (120,897) ​ $ (77,335) ​ $ (43,562) ​ License Revenue License revenue was $15.9 million for the year ended December 31, 2022, compared to $37.7 million for the year ended December 31, 2021.
Biggest changeThe grant date fair value of RSUs is determined using the closing market price of the Company’s ordinary shares on the date of grant. 124 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Change ​ ​ (in thousands) License revenue - related party ​ $ 14,017 ​ $ 15,920 ​ $ (1,903) Operating expenses: ​ ​ ​ ​ ​ ​ General and administrative ​ ​ 47,293 ​ ​ 46,550 ​ ​ 743 Research and development ​ 103,785 ​ 85,725 ​ 18,060 Total operating expenses ​ 151,078 ​ 132,275 ​ 18,803 Loss from operations ​ (137,061) ​ (116,355) ​ (20,706) Other non-operating income (expense) ​ ​ ​ ​ ​ ​ Foreign currency gain (loss) ​ 9,300 ​ (9,452) ​ 18,752 Interest income ​ 2,272 ​ 777 ​ 1,495 Interest expense ​ (13,245) ​ (4,946) ​ (8,299) Gain on sale of nonfinancial assets ​ ​ 54,208 ​ ​ — ​ ​ 54,208 Fair value adjustments ​ ​ 499 ​ 361 ​ 138 Net loss ​ $ (84,027) ​ $ (129,615) ​ $ 45,588 Other comprehensive (loss) income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation (loss) gain ​ ​ (7,482) ​ ​ 8,718 ​ ​ (16,200) Comprehensive loss ​ $ (91,509) ​ $ (120,897) ​ $ 29,388 ​ License revenue – related party License revenue was $14.0 million for the year ended December 31, 2023, compared to $15.9 million for the year ended December 31, 2022.
Other non-operating income (expense) Other non-operating income (expense) includes the following: Foreign currency (loss) gain Our consolidated financial statements are presented in U.S. dollars, which is our reporting currency.
Other non-operating income (expense) Other non-operating income (expense) includes the following: Foreign currency gain (loss) Our consolidated financial statements are presented in U.S. dollars, which is our reporting currency.
Investing Activities Net cash used in investing activities for the year ended December 31, 2022 of $45.0 million consisted of purchases of property and equipment for our manufacturing, laboratory and process development facilities and buildout costs of our new facilities in Ireland.
Net cash used in investing activities for the year ended December 31, 2022 of $45.0 million consisted of purchases of property and equipment for our manufacturing, laboratory and process development facilities and buildout costs of our new facilities in Ireland.
Research and Development Expenses Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, and include: ● employee-related expenses, including salaries, benefits and travel of our research and development personnel; ● expenses incurred in connection with third-party vendors that conduct clinical and preclinical studies and manufacture the drug product for the clinical trials and preclinical activities; ● acquisition of in process research and development; ● costs associated with clinical and preclinical activities including costs related to facilities, supplies, rent, insurance, certain legal fees, share-based compensation, and depreciation; and ● expenses incurred with the development and operation of our manufacturing facilities.
Research and development expenses Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, and include: ● employee-related expenses, including salaries, benefits and travel of our research and development personnel; ● expenses incurred in connection with third-party vendors that conduct clinical and preclinical studies and manufacture the drug product for the clinical trials and preclinical activities; ● acquisition and impairment of in process research and development; ● costs associated with clinical and preclinical activities including costs related to facilities, supplies, rent, insurance, certain legal fees, share-based compensation, and depreciation; and ● expenses incurred with the development and operation of our manufacturing facilities.
The duration, costs and timing of clinical trials and development of our existing product candidates or any other product candidate we may develop will depend on a variety of factors, including: 113 Table of Contents ● the scope, rate of progress, expense and results of clinical trials of our existing product candidates, as well as of any future clinical trials of other product candidates and other research and development activities that we may conduct; ● uncertainties in clinical trial design and patient enrollment rates; ● the actual probability of success for our product candidates, including the safety and efficacy, early clinical data, competition, manufacturing capability and commercial viability; ● significant and changing government regulation and regulatory guidance; ● the timing and receipt of any marketing approvals; and ● the expense of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
The duration, costs and timing of clinical trials and development of our existing product candidates or any other product candidate we may develop will depend on a variety of factors, including: 119 Table of Contents ● the scope, rate of progress, expense and results of clinical trials of our existing product candidates, as well as of any future clinical trials of other product candidates and other research and development activities that we may conduct; ● uncertainties in clinical trial design and patient enrollment rates; ● the actual probability of success for our product candidates, including the safety and efficacy, early clinical data, competition, manufacturing capability and commercial viability; ● significant and changing government regulation and regulatory guidance; ● the timing and receipt of any marketing approvals; and ● the expense of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
We have also incurred and expect to continue to incur increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements; director and officer insurance costs; and investor and public relations costs.
We have incurred and expect to continue to incur increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements; director and officer insurance costs; and investor and public relations costs.
Since our formation, we have devoted substantially all of our resources to developing our technology platform, establishing our viral vector manufacturing facilities and our cGMP plasmid and DNA production facility and developing manufacturing processes, advancing the product candidates in our ophthalmology, salivary gland and neurodegenerative disease programs, building our intellectual property portfolio, organizing and staffing our company, developing our business plan, raising capital, and providing general and administrative support for these operations.
Since our formation, we have devoted substantially all of our resources to developing our technology platform, establishing our viral vector manufacturing facilities and our GMP plasmid and DNA production facility and developing manufacturing processes, advancing the product candidates in our ophthalmology, salivary gland and neurodegenerative disease programs, building our intellectual property portfolio, organizing and staffing our company, developing our business plan, raising capital, and providing general and administrative support for these operations.
Financing Activities Net cash provided by financing activities was $95.2 million for the year ended December 31, 2022, which consisted primarily of $75.0 million from issuance of the Tranche 1 Notes, $25.0 million from the issuance of ordinary shares and $0.2 million in exercise of share options, which was offset by $2.8 million of payments for withholdings of shares for income taxes, and financing fees of $2.2 million.
Net cash provided by financing activities was $95.2 million for the year ended December 31, 2022, which consisted primarily of $75.0 million from issuance of the Tranche 1 Notes, $25.0 million from the issuance of ordinary shares and $0.2 million in exercise of share options, which was offset by $2.8 million of payments for withholdings of shares for income taxes, and issuance costs of $2.2 million.
Outstanding amounts under the Note Purchase Agreement bear interest at a fluctuating rate per annum equal to 10.00% plus the secured overnight financing rate administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a 1.00% floor.
Outstanding amounts under the Notes Purchase Agreement bear interest at a fluctuating rate per annum equal to 10.00% plus the secured overnight financing rate administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a 1.00% floor.
Outstanding amounts under the Note Purchase Agreement bear interest at a fluctuating rate per annum equal to 10.00% plus the secured overnight financing rate administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a 1.00% floor.
Outstanding amounts under the Notes Purchase Agreement bear interest at a fluctuating rate per annum equal to 10.00% plus the secured overnight financing rate administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a 1.00% floor.
We then consider any constraints on the variable consideration and include in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
We then consider any constraints on the variable 122 Table of Contents consideration and include in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
We also incurred expenses during the year ended December 31, 2022 and expect to continue to incur expenses related to research activities in additional therapeutic areas to expand our pipeline, developing our potentially transformative gene regulation technology, hiring additional personnel as needed in manufacturing, research, clinical operations, quality and other functional areas, and associated cash and share-based compensation expense, as 109 Table of Contents well as the further development of internal manufacturing capabilities and capacity and other associated costs including the management of our intellectual property portfolio.
We also incurred expenses during the year ended December 31, 2023 and expect to continue to incur expenses related to research activities in additional therapeutic areas to expand our pipeline, developing our potentially transformative gene regulation technology, hiring additional personnel as needed in manufacturing, research, clinical operations, quality and other functional areas, and associated cash and share-based compensation expense, as well as the further development of internal manufacturing capabilities and capacity and other associated costs including the management of our intellectual property portfolio.
For performance obligations which consist of licenses and other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at 116 Table of Contents a point in time and, if over time, the appropriate method of measuring progress.
For performance obligations which consist of licenses and other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress.
If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or 110 Table of Contents product candidates or grant licenses on terms that may not be favorable to us.
If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.
We expect that our research and development and general and administrative costs will increase in connection with conducting preclinical studies and clinical trials for our product candidates, building out internal capacity to have products manufactured to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations.
We expect that our research and development and general and administrative costs will increase in connection with conducting preclinical studies and clinical trials for our product candidates, building out internal capacity to have products manufactured to support preclinical studies and clinical trials as well as to manufacture commercial products, expanding our intellectual property portfolio, and providing general and administrative support for our operations.
In March 2019 and December 2021, we received a $100.0 million upfront payment and a $30.0 million milestone payment, respectively, in connection with the Collaboration Agreement, which also provides us with research funding, and we are eligible to receive additional potential milestone payments and royalties.
In March 2019 and December 2021, we received a $100.0 million upfront payment and a $30.0 million milestone payment, respectively, in connection with the Collaboration Agreement, which also provided us with research funding, and we were eligible to receive additional potential milestone payments and royalties.
In addition, we expect to continue incurring increasing costs associated with our clinical activities for AAV-hAQP1 for the treatment of radiation-induced xerostomia and xerostomia associated with Sjogren’s syndrome, as well as for AAV-GAD for the treatment of Parkinson’s disease.
We expect to continue incurring increasing costs associated with our clinical activities for AAV-hAQP1 for the treatment of radiation-induced xerostomia and xerostomia associated with Sjogren’s syndrome, as well as 113 Table of Contents for AAV-GAD for the treatment of Parkinson’s disease.
We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Cash Flows We had $115.5 million and $137.7 million of cash and cash equivalents as of December 31, 2022 and 2021, respectively.
We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Cash Flows We had $130.6 million and $115.5 million of cash, cash equivalents, and restricted cash as of December 31, 2023 and 2022, respectively.
To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps: 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 within the contract; and v. recognize revenue when (or as) the entity satisfies a performance obligation.
To determine revenue recognition, we perform the following five steps: 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 within the contract; and v. recognize revenue when (or as) the entity satisfies a performance obligation.
The change in the amount of $6.5 million was primarily due to a strengthening of the U.S. dollar against the pound sterling and euro during the year ended December 31, 2022. Liquidity and Capital Resources Since our inception, we have incurred significant operating losses. For the year ended December 31, 2022, we used $73.1 million in cash flows from operations.
The change in the amount of $16.2 million was primarily due to a strengthening of the U.S. dollar against the pound sterling and euro during the year ended December 31, 2023. Liquidity and Capital Resources Since our inception, we have incurred significant operating losses. For the year ended December 31, 2023, we used $105.4 million in cash flows from operations.
Restricted Share Units The Company grants restricted share units (“RSUs”) to employees, non-employee members of our board of directors and non-employee consultants as compensation for services performed. Awards of RSUs are accounted for in accordance with ASC 718, Compensation - Stock Compensation, or ASC 718 .
Treasury rates for securities with maturities approximating the option’s expected term. Restricted Share Units The Company grants restricted share units (“RSUs”) to employees, non-employee members of our board of directors and non-employee consultants as compensation for services performed. Awards of RSUs are accounted for in accordance with ASC 718, Compensation - Stock Compensation, or ASC 718 .
Additionally, operating assets, consisting of accounts receivable-related party, prepaid expenses, tax incentive receivable, other current assets and other assets, decreased by $17.3 million and operating liabilities, consisting of accounts payable, accrued expenses, and deferred revenue-related party, increased by $14.0 million.
Additionally, operating assets, consisting of accounts receivable-related party, prepaid expenses, tax incentive receivable, other current assets and other assets, decreased by $6.0 million and operating liabilities, consisting of accounts payable, accrued expenses, and deferred revenue-related party, decreased by $6.9 million.
In addition, we expect to continue incurring increasing research and development costs associated with our clinical activities for AAV-hAQP1 for the treatment of radiation-induced xerostomia and xerostomia associated with Sjogren’s syndrome, as well as for AAV-GAD for the treatment of Parkinson’s disease.
We expense research and development costs as incurred. Research and development activities are central to our business model. We expect to continue incurring increasing research and development costs associated with our clinical activities for AAV-hAQP1 for the treatment of radiation-induced xerostomia and xerostomia associated with Sjogren’s syndrome, as well as for AAV-GAD for the treatment of Parkinson’s disease.
These entities’ cash accounts holding U.S. dollars and intercompany payables and receivables are remeasured based upon the exchange rate at the date of remeasurement with the resulting gain or loss included in the consolidated statement of operations and comprehensive loss.
These entities’ cash accounts holding U.S. dollars and intercompany payables and receivables are remeasured based upon the exchange rate at the date of remeasurement with the resulting gain or loss included in the consolidated statement of operations and comprehensive loss. Interest income Interest income is comprised on interest earned on our interest-bearing bank accounts..
In accordance with ASC 606, we recognize revenue when the customer or collaborator obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.
For contracts that are determined to be within the scope of ASC 606, we recognize revenue when the customer or collaborator obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.
To date, we have financed our operations primarily with cash on hand and proceeds from the sales of our Series A ordinary shares, Convertible Preferred C Shares and ordinary shares.
We have historically financed our operations primarily through cash on hand and proceeds from the sale of our ordinary shares, series A ordinary shares and convertible preferred C shares.
Operating Expenses Our operating expenses since inception have consisted primarily of general and administrative costs and research and development costs. 112 Table of Contents General and Administrative Expenses General and administrative expenses consist primarily of salaries and other related costs, including share-based compensation, for personnel in our executive, finance, legal, business development and administrative functions.
General and administrative expenses General and administrative expenses consist primarily of salaries and other related costs, including share-based compensation, for personnel in our executive, finance, legal, business development and administrative functions.
Using this model, fair value is calculated based on assumptions with respect to (i) the fair value of our ordinary shares on the grant date; (ii) expected volatility of our ordinary share price, (iii) the periods of time over which employees and members of our board of directors are expected to hold their options prior to exercise (expected term), (iv) expected dividend yield on our ordinary shares, and (v) risk-free interest rates. 117 Table of Contents Our ordinary shares were not traded on a public exchange prior to our IPO in June 2018.
Using this model, fair value is calculated based on assumptions with respect to (i) the fair value of our ordinary shares on the grant date; (ii) expected volatility of our ordinary share price, (iii) the periods of time over which recipients are expected to hold their options prior to exercise (expected term), (iv) expected dividend yield on our ordinary shares, and (v) risk-free interest rates.
Through December 31, 2022, we received gross proceeds of approximately $471.0 million from sales of our ordinary shares, Series A ordinary shares and convertible preferred C shares, gross proceeds of approximately $75.0 million from issuance of debt and $130.0 million from the collaboration, option and license agreement with Janssen Pharmaceuticals, Inc.
Through December 31, 2023, we received gross proceeds of approximately $562.9 million from sales of our ordinary shares, Series A ordinary shares and convertible preferred C shares, gross proceeds of approximately $75.0 million from issuance of debt, $130.0 million from the Collaboration Agreement with Janssen, and $65.0 million from the Asset Purchase Agreement with Janssen.
The following table summarizes our sources and uses of cash for the period presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2022 2021 ​ ​ (in thousands) ​ Net cash used in operating activities $ (73,098) $ (10,530) Net cash used in investing activities ​ (44,963) ​ (61,717) ​ Net cash provided by financing activities ​ 95,200 ​ 1,708 ​ Net decrease in cash and cash equivalents ​ $ (22,861) ​ $ (70,539) ​ ​ Operating Activities During the year ended December 31, 2022, our cash used in operating activities of $73.1 million was primarily due to our net loss of $129.6 million as we incurred expenses associated with research activities on our clinical programs, manufacturing of our clinical trial materials, preclinical research programs and general and administrative expenses.
The following table summarizes our sources and uses of cash for the period presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2023 2022 ​ ​ (in thousands) ​ Net cash used in operating activities $ (105,365) $ (73,098) Net cash provided by (used in) investing activities ​ 34,034 ​ (44,963) ​ Net cash provided by financing activities ​ 84,023 ​ 95,200 ​ Net increase (decrease) in cash, cash equivalents and restricted cash ​ $ 12,692 ​ $ (22,861) ​ ​ Operating Activities During the year ended December 31, 2023, our cash used in operating activities of $105.4 million was primarily due to our net loss of $84.0 million as we incurred expenses associated with research activities on our clinical programs, manufacturing of our clinical trial materials, preclinical research programs and general and administrative expenses.
On November 9, 2022, we entered into a securities purchase agreement with JJDC, pursuant to which we, in a private placement, agreed to issue and sell to JJDC an aggregate of 3,742,514 ordinary shares at a purchase price of $6.68 per share for gross proceeds of approximately $25.0 million.
(“JJDC”), the investment arm of Johnson & Johnson, pursuant to which we, in a private placement, agreed to issue and sell to JJDC an aggregate of 3,742,514 ordinary shares at a purchase price of $6.68 per share for gross proceeds of approximately $25.0 million.
Interest Expense Interest expense was $4.9 million for the year ended December 31, 2022 compared to $0.3 million for the year ended December 31, 2021.
Interest expense Interest expense was $13.2 million for the year ended December 31, 2023 compared to $4.9 million for the year ended December 31, 2022.
The Note Purchase Agreement matures on August 2, 2026 and is interest-only during the term. We have the option to redeem outstanding principal notes at any time along with an applicable early redemption fee.
Previously, our request for the issuance of the Tranche 2 Notes was to be determined at Perceptive’s sole discretion. The Notes Purchase Agreement matures on August 2, 2026 and is interest-only during the term. We have the option to redeem outstanding principal notes at any time along with an applicable early redemption fee.
The Note Purchase Agreement matures on August 2, 2026 and is interest-only during the term. We have the option to redeem outstanding principal notes at any time along with an applicable early redemption fee.
Previously, our request for the issuance of the Tranche 2 Notes was to be determined at Perceptive’s sole discretion. The Notes Purchase Agreement matures on August 2, 2026 and is interest-only during the term. We have the option to redeem outstanding principal notes at any time along with an applicable early redemption fee.
When accounting for an arrangement that contains multiple performance obligations, we must develop judgmental assumptions, which may include market conditions, reimbursement rates for personnel costs, development timelines and probabilities of regulatory success to determine the stand-alone selling price for each performance obligation identified in the contract. 115 Table of Contents When we conclude that a contract should be accounted for as a combined performance obligation and recognized over time, we must then determine the period over which revenue should be recognized and the method by which to measure revenue.
When accounting for an arrangement that contains multiple performance obligations, we must develop judgmental assumptions, which may include market conditions, reimbursement rates for personnel costs, development timelines and probabilities of regulatory success to determine the stand-alone selling price for each performance obligation identified in the contract.
Interest Income Interest income was $0.8 million for the year ended December 31, 2022 compared to $0.2 million for the year ended December 31, 2021. The increase was due to a higher interest rate during 2022.
Interest income Interest income was $2.3 million for the year ended December 31, 2023 compared to $0.8 million for the year ended December 31, 2022. The increase was due to higher interest rates and cash balances during 2023.
For convenience of presentation some of the numbers have been rounded in the text below. 108 Table of Contents Overview We are a vertically integrated, clinical stage gene therapy company with six programs in clinical development and a broad pipeline of preclinical and research programs.
For convenience of presentation some of the numbers have been rounded in the text below. 112 Table of Contents Overview We are a vertically integrated, clinical-stage gene therapy company with a broad pipeline of late stage clinical programs supported by end-to-end manufacturing capabilities.
The increase of $2.8 million was primarily due to an increase of $3.4 million in share-based compensation, $2.0 million in legal and accounting fees, $1.3 million in consulting fees and $0.4 million in depreciation.
The increase of $0.7 million was primarily due to an increase of $4.1 million in legal and accounting fees, $2.2 million in payroll and payroll-related costs, $0.4 million in share-based compensation and $0.1 million in rent and facilities costs.
We have core capabilities in viral vector design and optimization and gene therapy manufacturing, as well as a potentially transformative gene regulation platform technology that allows precise, dose responsive control of gene expression by oral small molecules with dynamic range that can exceed 5000-fold.
We have core capabilities in viral vector design and optimization and a potentially transformative riboswitch gene regulation platform technology that allows for the precise, dose-responsive control of gene expression by oral small molecules.
ASC 718 requires all share-based payments to employees and non-employee directors, including grants of RSUs, to be recognized in the consolidated statement of operations and comprehensive loss based on their grant date fair values. The grant date fair value of RSUs is determined using the closing market price of the Company’s ordinary shares on the date of grant.
ASC 718 requires all share-based payments, including grants of RSUs, to be recognized in the consolidated statement of operations and comprehensive loss based on their grant date fair values.
The promised goods or services for our arrangements typically consist of a license to our intellectual property and research, development and manufacturing services. We may provide options to additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer.
We may provide options to additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer.
On December 19, 2022, the Financing Agreement was converted to a Note Purchase Agreement between the same parties and under substantially the same terms and conditions as the Financing Agreement, subject to certain customary note constitution terms.
On December 19, 2022, the Financing Agreement was converted to a Notes Purchase Agreement between the same parties and under substantially the same terms and conditions as the Financing Agreement, subject to certain customary note constitution terms. On August 10, 2023, the Company and the Subsidiary Guarantors entered into the First Consent and Amendment with Perceptive.
On December 19, 2022, the Financing Agreement was converted to a Note Purchase Agreement between the same parties and under substantially the same terms and conditions as the Financing Agreement, subject to certain customary note constitution terms.
On December 19, 2022, the Financing Agreement was converted to a Notes Purchase Agreement between the same parties and under substantially the same terms and conditions as the Financing Agreement, subject to certain customary note constitution terms. The Notes Purchase Agreement provides for the issuance of the Tranche 1 Notes in an initial amount of $75.0 million.
Based on our current cash, cash equivalents and accounts receivable – related party at December 31, 2022 and the research funding and milestone payments we expect to receive under the Collaboration Agreement, we estimate that we will be able to fund our operating expenses and capital expenditure requirements through the fourth quarter of 2024.
Based on our current cash, cash equivalents and accounts receivable – related party at December 31, 2023 and the near-term milestone payments we have received and expect to receive under the Asset Purchase Agreement, we 128 Table of Contents estimate that we will be able to fund our operating expenses and capital expenditure requirements into the first quarter of 2026.
Our obligations under the Note Purchase Agreement are secured by our London, UK and Shannon, Ireland manufacturing facilities, $3.0 million of our cash and the bank accounts of the Subsidiary Guarantors, and the issued and outstanding equity interests of the Subsidiary Guarantors. 120 Table of Contents The Note Purchase Agreement imposes covenants that include, among other things, enrolling in a Phase III trial for AAV-RPGR on or before June 30, 2023, and ensuring the Company’s Shannon manufacturing facility meets or satisfies all applicable good manufacturing practice requirements on or before December 31, 2023, as well as various restrictions on us and the Subsidiary Guarantors, including restrictions pertaining to: (i) the incurrence of additional indebtedness, (ii) limitations on liens, (iii) limitations on certain investments, (iv) making distributions, dividends and other payments, (v) mergers, consolidations and acquisitions, (vi) dispositions of assets, (vii) our maintenance of at least $3 million in a U.S. bank account, (viii) transactions with affiliates, (ix) changes to governing documents, (x) changes to certain agreements and leases and (xi) changes in control; however, certain of these restrictions contain exceptions which allow us to license, sell and monetize assets in our AAV-hAQP1 program in development to treat radiation-induced xerostomia, our AAV-GAD program in development to treat Parkinson’s disease and our gene regulation platform technologies.
The Notes Purchase Agreement imposes certain covenants and restrictions on us and the Subsidiary Guarantors, including restrictions pertaining to: (i) the incurrence of additional indebtedness, (ii) limitations on liens, (iii) limitations on certain investments, (iv) making distributions, dividends and other payments, (v) mergers, consolidations and acquisitions, (vi) dispositions of assets, (vii) our maintenance of at least $3.0 million in a U.S. bank account, (viii) transactions with affiliates, (ix) changes to governing documents, (x) changes to certain agreements and leases and (xi) changes in control; however, certain of these restrictions contain exceptions which allow us to license, sell and monetize assets in our AAV-hAQP1 program in development to treat radiation-induced xerostomia, our AAV-GAD program in development to treat Parkinson’s disease and our gene regulation platform technologies.
Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as the case may be.
Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as the case may be. 123 Table of Contents Share-Based Compensation Options We grant share options to employees, non-employee members of our board of directors and non-employee consultants as compensation for services performed.
The expected dividend yield is zero as we have never paid dividends and do not currently anticipate paying any in the foreseeable future. Risk-free interest rates are based on quoted U.S. Treasury rates for securities with maturities approximating the option’s expected term.
Consequently, expected volatility is based on an analysis of our Company and guideline companies in accordance with ASC 718. The expected dividend yield is zero as we have never paid dividends and do not currently anticipate paying any in the foreseeable future. Risk-free interest rates are based on quoted U.S.
Based on our cash and cash equivalents at December 31, 2022 and the research funding and milestone payments we expect to receive under the Collaboration Agreement, we estimate that such funds will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through the fourth quarter of 2024.
Based on our cash, cash equivalents and accounts receivable – related party at December 31, 2023 and the near-term milestone payments we have received and expect to receive under the Asset Purchase Agreement, we estimate that such funds will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2026.
The resulting translation gain adjustments are recorded directly as a separate component of shareholders’ equity and as other comprehensive loss on the consolidated statements of operations and comprehensive loss. 114 Table of Contents Critical Accounting Policies and Use of Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
Critical Accounting Policies and Use of Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
The increase in the loss of $3.2 million was primarily due to an unrealized loss on the valuation of the Company’s intercompany payables and receivables due to the strengthening of the U.S. dollar against the pound sterling and euro during the year ended December 31, 2022.
The change of $18.8 million was primarily due to the strengthening of the U.S. dollar against the pound sterling and euro during the year ended December 31, 2023 as it relates to the valuation of our intercompany payables and receivables.
We expense research and development costs as incurred. Research and development activities are central to our business model.
Research and Development Research and development costs are charged to expense as incurred.
ASC 718 requires all share-based payments to employees and non-employee directors, including grants of share options, to be recognized in the statement of operations and comprehensive loss based on their grant date fair values. The grant date fair value of share options is estimated using the Black-Scholes option valuation model.
Share-based compensation are accounted for in accordance with ASC 718, Compensation—Stock Compensation , or ASC 718. ASC 718 requires all share-based payments, including grants of share options, to be recognized in the statement of operations and comprehensive loss based on their grant date fair values.
The net loss included non-cash charges of $37.8 million, which consisted of $20.8 million of share-based compensation, $6.3 million of a foreign currency loss, $7.9 million of depreciation and amortization, $1.0 million of shares issued in connection with a license agreement, $1.0 million of shares issued in connection with an asset acquisition, $0.4 million of a fair value adjustment, $0.2 million of net change in right-of-use assets and liabilities, $0.1 million of amortization of interest on asset retirement obligations and $0.1 million of loss on disposal of equipment, furniture and fixtures.
The net loss included net non-cash gains of $20.4 million, which consisted of $54.2 million of a gain on sale of nonfinancial assets, $27.7 million of share-based compensation, $13.7 million of depreciation and amortization, $9.3 million of a foreign currency gain, $1.1 million of amortization of the debt discount, $1.1 million impairment related to acquired in-process research and development and right-of-use assets, $0.5 million of a fair value upward adjustment, $0.2 million of net change in right-of-use assets and liabilities and $0.2 million of amortization of interest on asset retirement obligations.
Additionally, operating assets, consisting of accounts receivable-related party, prepaid expenses, tax incentive receivable, other current assets and other assets, decreased by $5.2 million and operating liabilities, consisting of accounts payable, accrued expenses, and deferred revenue-related party, decreased by $4.4 million. 121 Table of Contents During the year ended December 31, 2021, our cash used in operating activities of $10.5 million was primarily due to our net loss of $79.6 million as we incurred expenses associated with research activities on our clinical programs, manufacturing of our clinical trial materials, preclinical research programs and general and administrative expenses.
During the year ended December 31, 2022, our cash used in operating activities of $73.1 million was primarily due to our net loss of $129.6 million as we incurred expenses associated with research activities on our clinical programs, manufacturing of our clinical trial materials, preclinical research programs and general and administrative expenses.
We closed on the acquisition of the first building in August 2020 and closed on the second building in January 2021. As a result of these incurred and expected expenses we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements, or other sources.
As a result of these incurred and expected expenses we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements, or other sources. 127 Table of Contents We do not currently have any approved products and have never generated any revenue from product sales.
We are a clinical stage company and have not generated any product revenues to date. We have six clinical programs and a pipeline of preclinical programs. Since inception, we have incurred significant operating losses. Our net losses for the years ended December 31, 2022 and 2021 were $129.6 million and $79.6 million, respectively.
We have ongoing clinical development programs and a broad pipeline of preclinical programs. Since inception, we have incurred significant operating losses. Our net losses for the years ended December 31, 2023 and 2022 were $84.0 million and $129.6 million, respectively. As of December 31, 2023, we had an accumulated deficit of $554.2 million.
At contract inception, once the contract is determined to be by analogy within the scope of ASC 606, we assess the goods or services promised within the contract to determine whether each promised good or service is a performance obligation.
At contract inception, we assess the goods or services promised within the contract to determine whether each promised good or service is a performance obligation. The promised goods or services for our arrangements typically consist of a license to our intellectual property and research, development and manufacturing services.
The Note Purchase Agreement provides for the issuance of the Tranche 1 Notes in an initial amount of $75.0 million, and we may request the issuance of the Tranche 2 Notes in an additional amount of $25.0 million to be made available at Perceptive’s sole discretion before August 2, 2024.
Pursuant to the First Consent and Amendment, we may request in our sole discretion, and Perceptive has agreed to subscribe to purchase upon such request, the issuance of the Tranche 2 Notes in an additional amount of $25.0 million at any time before August 2, 2024.
Therefore, we believe that our future volatility will differ materially during the expected term from the volatility that would be calculated from our historical share prices to date. Consequently, expected volatility is based on an analysis of guideline companies in accordance with ASC 718.
Our ordinary shares were not traded on a public exchange prior to our IPO in June 2018. Therefore, we believe that our future volatility will differ materially during the expected term from the volatility that would be calculated from our historical share prices to date.
The Note Purchase Agreement provides for the issuance of the Tranche 1 Notes in an initial amount of $75.0 million, and we may request the issuance of the Tranche 2 Notes in an additional amount of $25.0 million to be made available at Perceptive’s sole discretion before August 2, 2024.
Pursuant to the First Consent and Amendment, we may request, in our sole discretion, and Perceptive has agreed to subscribe to purchase upon such request, the issuance of the Tranche 2 Notes in an additional amount of $25.0 million at any time before August 2, 2024.
The increase was primarily due to the interest on the Financing Agreement entered into in August 2022, which was later converted to a Note Purchase Agreement in December 2022. ​ ​ 119 Table of Contents Other Comprehensive Income – Foreign Currency Translation Gain Foreign currency translation adjustments resulted in a translation gain of $8.7 million for the year ended December 31, 2022 compared to a translation gain of $2.2 million for the year ended December 31, 2021.
Other Comprehensive (Loss) Income – Foreign Currency Translation (Loss) Gain Foreign currency translation adjustments resulted in a translation loss of $7.5 million for the year ended December 31, 2023 compared to a translation gain of $8.7 million for the year ended December 31, 2022.
Payments received from a collaboration partner to which this policy applies may include upfront payments in respect of a license of intellectual property, development and commercialization-based milestones, and royalties. Revenue Recognition Arrangements with collaborators may include licenses to intellectual property, research and development services, manufacturing services for clinical and commercial supply, and participation on joint steering committees.
Payments received from a collaboration partner to which 121 Table of Contents this policy applies may include upfront payments in respect of a license of intellectual property, development and commercialization-based milestones, and royalties. Revenue Recognition We evaluate the promised goods or services to determine which promises, or group of promises, represent performance obligations in our contracts with customers.
Under the Collaboration Agreement, we received an upfront payment in the amount of $100.0 million in March 2019 and a milestone payment in the amount of $30.0 million in December 2021. Additionally, pursuant to the Collaboration Agreement, we are eligible to receive research and development funding and additional potential milestone payments and royalties.
We do not expect to generate revenue from sales of products for several years, if at all. Under the Collaboration Agreement, we received an upfront payment in the amount of $100.0 million in March 2019 and a milestone payment in the amount of $30.0 million in December 2021.
Other comprehensive income Other comprehensive income includes the following: Foreign currency translation gain Expenses of subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the consolidated balance sheet date.
Gain on sale of nonfinancial assets The gain on sale of nonfinancial assets represents the value allocated to the nonfinancial assets sold and assigned to Janssen including the UCLB RPGR License Agreement relating to the research, development, manufacture 120 Table of Contents and exploitation of the RPGR Product, and other related assets pursuant to the Asset Purchase Agreement, net of carrying value. ​ Other comprehensive (loss) income Other comprehensive (loss) income includes the following: Foreign currency translation (loss) gain Expenses of subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the period.
(“Janssen”), one of the Janssen Pharmaceuticals Companies of Johnson & Johnson (the “Collaboration Agreement”). As of December 31, 2022, we had cash and cash equivalents of $115.5 million, as well as $21.3 million we expect to receive from Janssen in the first quarter of 2023 in connection with the Collaboration Agreement.
As of December 31, 2023, we had cash, cash equivalents and restricted cash of $130.6 million, as well as $10.1 million we expect to receive from Janssen in the first quarter of 2024 in connection with the Collaboration Agreement. We are a clinical stage company and have not generated any product revenues to date.
We do not currently have any approved products and have never generated any revenue from product sales. We have historically financed our operations primarily through cash on hand and proceeds from the sale of our ordinary shares, series A ordinary shares and convertible preferred C shares.
To date, we have financed our operations primarily with cash on hand and proceeds from the sales of our Series A ordinary shares, Convertible Preferred C Shares and ordinary shares, debt financing and upfront and milestone payments in connection with the Collaboration Agreement and Asset Purchase Agreement.
Net cash provided by financing activities was $1.7 million for the year ended December 31, 2021, which is primarily from the exercise of share options. Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements under applicable SEC rules and do not have any holdings in variable interest entities.
Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements under applicable SEC rules and do not have any holdings in variable interest entities. ​ ​ 130 Table of Contents
Our total operating expenses were $132.3 million and $110.5 million for the years ended December 31, 2022 and 2021, respectively.
In December 2023, we received a non-refundable upfront payment of $65.0 million in connection with the Asset Purchase Agreement. Our total operating expenses were $151.1 million and $132.3 million for the years ended December 31, 2023 and 2022, respectively.
If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations. 115 Table of Contents Highlights and Recent Developments Recent Development Highlights and Anticipated Milestones ​ AAV-hAQP1 for the Treatment of Grade 2/3 Radiation-Induced Xerostomia: Grade 2/3 radiation-induced xerostomia (RIX) is a severely debilitating consequence of radiation treatment for head and neck cancer that affects approximately 30-40% of all patients treated with radiation for head and neck cancer.
This decrease is a result of the Company receiving a $30.0 million milestone payment in connection with the Collaboration Agreement during the year ended December 31, 2021. General and Administrative Expenses General and administrative expenses were $46.6 million for the year ended December 31, 2022, compared to $43.8 million for the year ended December 31, 2021.
General and administrative expenses General and administrative expenses were $47.3 million for the year ended December 31, 2023, compared to $46.6 million for the year ended December 31, 2022.
We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. We record amounts as accounts receivable when the right to consideration is deemed unconditional.
We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. If there are multiple performance obligations, we allocate the transaction price to each performance obligation based on their estimated standalone selling prices (“SSP”).
These increases were partially offset by a decrease of $2.6 million in license fees and $1.5 million in acquired research and development costs. Reimbursements under the Collaboration Agreement for the year ended December 31, 2022 increased $4.3 million as compared to the prior year primarily due to an increase in activity in the programs licensed under the Collaboration Agreement.
These increases were partially offset by a decrease of $16.6 million in expenses related to our preclinical programs primarily related to preclinical ocular diseases in the year ended December 31, 2023 compared to the year ended December 31, 2022. 126 Table of Contents Foreign currency gain (loss) Foreign currency gain was $9.3 million for the year ended December 31, 2023 compared to a loss of $9.5 million for the year ended December 31, 2022.
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Led by an experienced management team, we have taken a portfolio approach by licensing, acquiring and developing technologies that give us depth across both product candidates and indications.
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We have an internally developed manufacturing platform process, internal plasmid production for GMP, two GMP viral vector production facilities as well as an in-house Quality Control hub for stability and release, all fit for IND through commercial supply.
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Our initial focus is on three distinct areas of unmet medical need: ocular diseases, including both inherited retinal diseases as well as large degenerative ocular diseases, neurodegenerative diseases, and severe forms of xerostomia.
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We are focusing the riboswitch platform on delivery of metabolic peptides including GLP-1, GIP, glucagon and PYY using oral small molecules, as well as cell therapy for oncology and autoimmune diseases.
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Though initially focusing on the eye, central nervous system and salivary gland, we intend to expand our focus in the future to develop additional gene therapy treatments for patients suffering from a range of serious diseases.
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Although initially focusing on the eye, central nervous system, and salivary gland, we have developed the technology to apply genetic medicine to more common diseases, increasing efficacy, addressing novel targets, and expanding access in some of the largest disease areas where the unmet need remains great.
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As of December 31, 2022, we had an accumulated deficit of $470.2 million. We do not expect to generate revenue from sales of products for several years, if at all.
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Additionally, pursuant to the Collaboration Agreement, we received research and development funding for certain research, manufacturing and clinical development costs.

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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 changeAssuming no change in the outstanding borrowings under the Note Purchase Agreement, we estimate that a hypothetical 1% increase in the SOFR would increase our annual interest expense by approximately $0.8 million as of December 31, 2022. ​ ​ ​ 123 Table of Contents
Biggest changeAssuming no change in the outstanding borrowings under the Notes Purchase Agreement, we estimate that a hypothetical 1% increase in the SOFR would increase our annual interest expense by approximately $0.8 million for the year ended December 31, 2023. ​ ​ ​ 131 Table of Contents
Borrowings under the Note Purchase Agreement bear interest at a fluctuating rate per annum equal to 10.00% plus the secured overnight financing rate (“SOFR”) administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a 1.00% floor. See Note 14 to our consolidated financial statements included elsewhere in this Form 10-K.
Borrowings under the Notes Purchase Agreement bear interest at a fluctuating rate per annum equal to 10.00% plus the secured overnight financing rate (“SOFR”) administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a 1.00% floor. See Note 13 to our consolidated financial statements included elsewhere in this Form 10-K.
Interest Rate Risk We are exposed to market risk as a result of changes in interest rates applicable to borrowings under our Note Purchase Agreement.
Interest Rate Risk We are exposed to market risk as a result of changes in interest rates applicable to borrowings under our Notes Purchase Agreement.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are exposed to market risks in the ordinary course of our business. These risks primarily include foreign currency exchange rate sensitivities and interest rate risk. Foreign Currency Exchange Risk We currently operate in the United States, the United Kingdom, the Netherlands, Ireland and Belgium.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are exposed to market risks in the ordinary course of our business. These risks primarily include foreign currency exchange rate sensitivities and interest rate risk. Foreign Currency Exchange Risk We currently operate in the United States, the United Kingdom and the European Union.
With respect to our foreign currency exposures as of December 31, 2022, we estimate a 10% unfavorable movement in foreign currency exchange rates would have the effect of creating an additional foreign currency loss of approximately $28.1 million within other non-operating income (expense) for the year ended December 31, 2022.
With respect to our foreign currency exposures as of December 31, 2023, we estimate a 10% unfavorable movement in foreign currency exchange rates would have the effect of creating an additional foreign currency loss of approximately $7.4 million within other non-operating income (expense) for the year ended December 31, 2023.
We may use interest rate cap derivatives, interest rate swaps or other interest rate hedging instruments to economically hedge and manage interest rate risk with respect to our variable floating rate debt. As of December 31, 2022, the annual interest rate was 13.02% and the outstanding balance of the Tranche 1 Notes was $75.0 million.
We may use interest rate cap derivatives, interest rate swaps or other interest rate hedging instruments to economically hedge and manage interest rate risk with respect to our variable floating rate debt. As of December 31, 2023, the annual interest rate was 15.32% and the outstanding balance of the Tranche 1 Notes was $75.0 million.

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