The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended
December 31, 2020, which was filed with the U.S. Securities and Exchange Commission, or SEC, on March 15, 2021, or the 2020 10-K. This discussion and analysis contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as those set forth under "Risk Factors" in Part I, Item 1A. of the 2020 10-K, as may be amended or updated in subsequent filings with the SEC, our actual results may differ materially from those anticipated in these forward-looking statements.
We are a clinical-stage genetic medicine company pioneering gene editing and gene delivery platforms to address rare and serious diseases from infancy through adulthood. Our genome editing platform, GeneRide™, is a new approach to precise gene insertion harnessing a cell's natural deoxyribonucleic acid, or DNA, repair process potentially leading to durable therapeutic protein expression levels. Our gene delivery platform, sAAVy™, is an adeno-associated virus, or AAV, capsid engineering platform designed to optimize gene delivery for treatments in a broad range of indications and tissues. Our lead product candidate, LB-001, is a single-administration, genome editing therapy developed using our GeneRide technology, currently in Phase 1/2 development for the treatment of methylmalonic acidemia, or MMA, in pediatric patients. MMA is a rare and life-threatening genetic disorder affecting approximately 1 in 50,000 newborns in
the United Statesthat often results in developmental delays and other long-term complications and a high rate of hospitalizations. In April 2021, we granted CANbridge Care Pharma Hong Kong Limited, or CANbridge, an exclusive option to obtain an exclusive license to develop and commercialize LB-001 for the treatment of MMA in China, Taiwan, Hong Kongand Macau. Also based on our GeneRide technology, we completed the first phase of preclinical development of our product candidate, LB-301, for the treatment of Crigler-Najjar syndrome, a rare monogenic pediatric disease affecting approximately 1 in 1,000,000 newborns globally, in collaboration with Takeda Pharmaceutical Company Limited, or Takeda. In addition, we are developing treatments based on our GeneRide technology for two indications in collaboration with Daiichi Sankyo Company, or Daiichi. In addition, we demonstrated proof of concept of our GeneRide platform in hemophilia B and alpha-1-antitrypsin deficiency, or A1ATD, animal disease models, and more recently, in hereditary tyrosinemia type 1, or HT1, and Wilson disease. Based on our sAAVy technology, we are developing gene therapy candidates utilizing, among other things, AAV sL65, the first capsid produced from sAAVy, for the treatment of Fabry and Pompe diseases in collaboration with CANbridge. We also granted CANbridge an option to obtain an exclusive worldwide license to certain of our intellectual property rights, including those relating to sL65, to develop and commercialize gene therapy candidates for the treatment of two additional indications. We expect to select future product candidates from diseases addressed by targeting the liver initially, and later by targeting other tissues such as the central nervous system, or CNS, muscle, or other tissues. We plan to select one new development candidate from our preclinical portfolio by the end of 2021 and commence Investigational New Drug Application-enabling studies utilizing our modular approach and leveraging learnings from our lead programs.
LB-001 for the treatment of methylmalonic acidemia (MMA) in pediatric patients
We are evaluating the safety, tolerability and preliminary efficacy of LB-001 in our Phase 1/2 SUNRISE clinical trial in pediatric patients with MMA. The SUNRISE trial is designed to enroll up to eight patients with ages ranging from six months to twelve years and evaluate a single administration of LB-001 at two dose levels (5 x 1013 vg/kg and 1 x 1014 vg/kg). On
June 2, 2021, we announced that the first patient was dosed in the SUNRISE trial. In accordance with the FDA-cleared protocol, we initially enrolled patients in the three- to twelve-year-old age group at the lower dose. On October 18, 2021, we announced early results from the SUNRISE trial. The early results showed measurable levels of albumin-2A, a technology-related biomarker indicating site-specific gene insertion and protein expression. Detection of albumin-2A is an indication that we have achieved the first ever in vivo genome editing in children. On October 18, 2021, we also announced that, following an evaluation of the safety data from the first two patients enrolled in the SUNRISE trial, the independent Data Safety Monitoring Board, or the DSMB, overseeing the SUNRISE trial recommended continuation of the trial without modification. Albumin-2A detection together with the DSMB continuation recommendation enabled us to begin enrolling two patients in the higher dose cohort (with ages ranging three to twelve years old), and two patients in the lower age (six months to two years old) cohort at the 23 -------------------------------------------------------------------------------- lower dose. In late October 2021, the third patient dosed in the SUNRISE trial, who received 5 x 1013 vg/kg of LB-001 and was in the six-month to two-year-old age group, experienced a serious adverse event, or SAE, deemed possibly related to study drug. The SAE was noted during a scheduled visit that took place two weeks after dosing. This SAE is being ultimately categorized as a case of thrombotic microangiopathy, or TMA, which has been previously reported in association with other adeno-associated virus genetic therapies, and classically presents as a syndrome of hemolytic anemia, thrombocytopenia, and acute kidney injury. While the SAE experienced by this patient was characterized by hemolytic anemia and acute kidney injury, thrombocytopenia was not present. The patient was hospitalized, monitored and responded well to intravenous fluids and parenteral nutrition. The patient is currently asymptomatic. Key laboratory parameters that were abnormal at the time of the visit have either returned to normal or improved, and following a hospitalization of less than a week, the patient is continuing outpatient assessments in accordance with the protocol. We reported the SAE to the DSMB along with a proposed response plan, which was endorsed by the DSMB. The plan includes proposed protocol amendments to increase patient monitoring. In accordance with our regulatory obligations, we also reported the SAE to the FDA. We plan to continue to enroll the study in accordance with the protocol and additional safety measures we have communicated to the sites. In accordance with the protocol, following the dosing of two patients in the lower age cohort and two patients from the older age cohort with the higher dose, the SUNRISE trial could progress to dosing additional patients in the younger age group at the higher dose (cohort 2, younger age group, n=2), subject to a review of safety data and/or albumin-2A detection, as applicable. The SUNRISE trial includes a six-week staggering interval between the dosing of each patient with the exception that age de-escalation and dose escalation can occur simultaneously. Patients participate in a pre-dosing observational period and are administered a prophylactic steroid regimen. The primary endpoint of the SUNRISE trial is to assess the safety and tolerability of LB-001 at 52 weeks after a single infusion. Additional endpoints include changes in disease-related biomarkers, including serum methylmalonic acid, clinical outcomes such as growth and healthcare utilization, and the pharmacodynamic marker albumin-2A. We expect seven centers in the United Statesand one center in Saudi Arabiato participate in the SUNRISE trial. Based on current projections for enrollment, we expect to announce interim data by the end of 2021. In addition to the Phase 1/2 SUNRISE trial, we have also completed a retrospective natural history study designed to evaluate disease progression in pediatric patients with MMA. These data helped to provide us with a better understanding of the natural progression of the disease, the impact of a liver transplant on the outcomes of MMA patients and potential endpoints such as the relevance of methylmalonic acid levels on clinical outcomes, with the goal of informing our future clinical development in MMA and our discussions with regulatory agencies as we look toward advancing our MMA program. We presented preliminary findings from our retrospective natural history study at the American College of Medical Geneticsin April 2021. In July 2019, the U.S. Food and Drug Administration, or FDA, granted rare pediatric disease designation for LB-001 for the treatment of MMA, and in April 2019, the FDA granted orphan drug designation for LB-001 for the treatment of MMA. In November 2020, the FDA granted fast track designation for LB-001 for the treatment of MMA, and in June 2021, the European Commissiongranted orphan drug designation to LB-001 for the treatment of MMA.
Our GeneRide platform
Our genome editing platform, GeneRide, is a new approach to precise gene insertion harnessing a cell's natural DNA repair process potentially leading to durable therapeutic protein expression levels. GeneRide is designed to support the development of a new generation of genetic medicines designed to insert a corrective gene in the human genome with the goal of avoiding certain risks associated with other methods of gene therapy and gene editing. The therapies developed based on our GeneRide platform are designed to use an engineered viral vector to deliver a corrective gene, known as a transgene, to the nuclei of a patient's cells utilizing a one-time infusion. We believe that GeneRide has the potential to enable us to target diseases that cannot be treated by current genetic medicines, including early onset genetic childhood diseases where early intervention is critical in order to prevent progressive irreversible tissue damage that leads to long-term complications. In addition, preclinical studies have shown that some specific product candidates targeting the liver based on the GeneRide platform have exhibited "selective advantage," where modified cells take over the non-modified cells as the liver continues to regenerate, which allowed expression of therapeutic levels of the missing protein. At the
European Society of Gene & Cell Therapy, or ESGCT, conference in October 2021, we presented preclinical data that validates previous research in MMA and highlights selective advantage in two additional indications characterized by intrinsic liver damage, 24
-------------------------------------------------------------------------------- HT1, and Wilson disease. In the HT1 mice models with acute liver damage, the data showed that GeneRide-corrected hepatocytes repopulated the entire liver within weeks post-administration, replacing the diseased hepatocytes with corrected hepatocytes. These mice models demonstrated restored normal body growth, liver function, and undetectable succinyl acetone levels, one of the toxic metabolites that accumulates in patients with HT1. In a Wilson disease mouse model, GeneRide-corrected hepatocytes partially repopulated the liver within months, and the treated mice showed improvements in liver function, hepatomegaly, and urinary copper excretion.
Our sAAVy platform
We are also developing sAAVy, a next generation AAV capsid platform, for use in gene editing and gene therapy. At the
American Society of Gene & Cell Therapy, or ASGCT, 2020 Annual Meeting in May 2020, we presented data showing that the capsids delivered highly efficient functional transduction of human hepatocytes in a humanized mouse model. Based on these data, we believe the top-tier capsid candidates from this effort demonstrated the potential to achieve significant improvements over benchmark AAVs that are currently in clinical development. We are developing these highly potent vectors for use in our internal development candidates and collaborations. We announced data generated from translational animal models using these capsids at the ASGCT 2021 Annual Meeting in May 2021. In addition, in January 2021, we announced the extension of our collaboration with Children's Medical Research Institute, or CMRI, to continue to develop next-generation capsids for gene therapy and gene editing applications in the liver as well as two additional tissues.
Presentation of the operation
Since our inception in 2014, we have devoted the majority of our efforts to research and development, including our preclinical and clinical development activities and our manufacturing and process development activities, raising capital, and providing general and administrative support for these operations. We do not have any products approved for sale and our only revenue recognized to date has been revenue related to upfront payments and research cost reimbursement under our strategic agreements with CANbridge, Daiichi and Takeda. Through
September 30, 2021, we have raised approximately $126.0 millionthrough underwritten public offerings and at-the-market sales of our common stock and $33.1 millionin net proceeds from the sale of preferred stock prior to our initial public offering. In July 2019, we entered into a Loan and Security Agreement for term loans with Oxford Finance LLCand Horizon Technology Finance Corporation, or the Loan Agreement, under which term loans in an aggregate principal amount of $20.0 millionwere made available to us in two tranches, subject to certain terms and conditions. As of September 30, 2021, we had drawn down the $10.0 millionfirst tranche. In the second quarter of 2021, we met the conditions to initiate drawdown of the $10.0 millionsecond tranche but did not exercise our right to do so and the option to draw down the second tranche of the Term Loans expired. We have incurred significant operating losses since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of our product candidate and any future product candidates. Our net loss was $31.0 millionfor the nine months ended September 30, 2021. As of September 30, 2021, we had an accumulated deficit of $131.0 million. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future in connection with our ongoing activities. While we intend to continue to evaluate ways to enhance our liquidity and capital position, our efforts will largely depend on future developments that are highly uncertain and cannot be predicted with confidence at this time.
Impact of COVID-19
We are closely monitoring the COVID-19 pandemic in order to promote the safety of our personnel and to continue advancing our research and development activities. We are following federal, state and local requirements and guidelines with respect to the COVID-19 pandemic, and have allowed our employees to return to working on-premises in accordance with those requirements and guidelines. The COVID-19 pandemic did not have a material impact on our results of operations, cash flow and financial position as of and for the nine months ended
September 30, 2021. However, we are aware that certain of our third-party vendors are being affected by import/export and other restrictions due to the COVID-19 pandemic, which are currently having an impact on certain of our research, development and manufacturing activities. Further, the pandemic could also potentially affect the business of the FDA, the EMA or other governmental authorities, which could result in delays in meetings, reviews, inspections and approvals relating to LB-001. Any decision by the FDA, EMA or other governmental authorities to delay meeting with us or scheduling inspections in light of COVID-19 could have a material adverse effect on our clinical trials, which could increase our operating expenses and have a material adverse effect on our financial results, including the timing and amount of future regulatory milestones we could receive from our partners.
We cannot predict the impact of the progression of the COVID-19 pandemic on future results due to various factors, including the health of our employees and their employees, our ability to maintain operations, the capacity of our suppliers, suppliers and collaborators
to continue operations, any other government and / or public action taken in response to the pandemic and, ultimately, the duration of the pandemic.
We plan to continue to closely monitor the COVID-19 pandemic to ensure the safety of our staff and to continue to advance our research and development activities.
Components of the results of operations
Our only revenue recognized to date has been revenue related to upfront payments and research cost reimbursement under our agreements with CANbridge, Daiichi and Takeda. We have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future.
Research and development costs
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:
• salaries, benefits and other related costs, including stock-based
compensation expense, for personnel engaged in research and development
• license maintenance costs and milestone costs incurred in connection with
various license agreements; • the costs of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;
• expenses incurred under agreements with contract research organizations, or
CROs, contract manufacturing organizations or CMOs, as well as academics
institutions and consultants who conduct our preclinical and other studies
scientific development services;
• plant-related expenses, which include direct depreciation costs and
allocated expenses for rent and maintenance of facilities and other operating costs;
• the costs of external consultants, including their fees and related expenses; and
• costs related to compliance with regulatory requirements. 26
-------------------------------------------------------------------------------- We expense research and development costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued research and development expenses. Research and development activities are central to our business model. We expect that our research and development expenses will increase in the future as we continue to conduct the clinical program for our product candidate, LB-001, and as we increase our research and development headcount to continue to discover and develop additional product candidates. If any of our product candidates enter into later stages of clinical development, we expect that they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.
General and administrative expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development and administrative functions. General and administrative expenses also include professional fees for legal, patent, accounting, auditing, tax and consulting services, travel expenses, and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.
We anticipate that our general and administrative expenses will increase in the future as we increase our general and administrative staff to support our continued research and development and the potential commercialization of our product candidates.
Other income (expenses), net
Interest income consists primarily of interest on our cash and cash equivalents and investments. Interest expense consists of interest expense related to the aggregate
$10.0 millionprincipal amount of the Term A Loan borrowing under the loan agreement in July 2019. A portion of the interest expense on the Term A Loan is non-cash expense relating to the accretion of the debt discount, amortization of issuance costs and accretion of the final payment fee. During each of the three and nine months ended September 30, 2021and 2020, we recorded $0.3 millionand $0.8 million, respectively, in interest expense, of which $0.2 millionand $0.7 million, respectively, related to cash interest paid and the remainder to the accretion of the debt discount and amortization of issuance costs. Results of Operations
Comparison of the three completed months
The following table summarizes our operating results for the three months ended.
Three Months Ended September 30, 2021 2020 (in thousands) REVENUE Collaboration and service revenue
$ 2,120 $ 926Total revenue 2,120 926 OPERATING EXPENSES Research and development 7,806 5,492 General and administrative 4,257 3,200 Total operating expenses 12,063 8,692 LOSS FROM OPERATIONS (9,943 ) (7,766 ) OTHER (EXPENSE) INCOME: Other expense, net (270 ) (273 ) Loss before income taxes (10,213 ) (8,039 ) Income tax provision 28 - Net loss $ (10,185 ) $ (8,039 )27
Revenue Our revenue for the three months ended
September 30, 2021consisted of $2.1 million, relating to our agreements with CANbridge, Daiichi and Takeda. Our revenue for the three months ended September 30, 2020consisted of $0.9 millionin revenue under the Takeda agreement. The increase in revenue during the three months ended September 30, 2021compared to the corresponding period in 2020 was related to revenue recognized under the April 2021CANbridge and Daiichi agreements, which was partially offset by a decrease in revenue under the Takeda Agreement due to winding down activities. We expect our collaboration and service revenue to increase in the fourth quarter of 2021, as compared to the third quarter of 2021, as we continue to conduct activities under the CANbridge and Daiichi agreements.
Research and development costs
The following table summarizes our research and development expenses for the three months ended.
Three Months Ended September 30, 2021 2020 Increase (in thousands) LB-001 external development and manufacturing costs
$ 2,207 $ 1,714 $ 493Personnel-related costs 2,778 1,536 1,242 Lab supplies 1,068 642 426 Other research and development costs 1,753 1,600 153
Total research and development expenditure
$ 2,314Research and development expenses for the three months ended September 30, 2021were $7.8 million, compared to $5.5 millionfor the three months ended September 30, 2020. The increase of approximately $2.3 millionwas primarily due to increases of $1.2 millionin personnel-related costs related to an increase in headcount associated with the progress of both our partnered and internal programs and a corresponding increase of $0.4 millionin lab supplies. In addition, LB-001 external development and manufacturing costs increased $0.5 millionmainly driven by an increase in activities supporting the LB-001 development program. We expect that our research and development expenses will increase during the fourth quarter as we continue to advance our pipeline both internally and with collaborators as well as continue to advance our LB-001 clinical program.
General and administrative expenses
General and administrative expenses were
$4.3 millionfor the three months ended September 30, 2021, compared to $3.2 millionfor the three months ended September 30, 2020. The increase of approximately $1.1 millionwas primarily driven by an increase of $0.4 millionin personnel expenses as we increased our headcount to support our continued research and development activities as well as build our corporate and administrative functions, as well as an increase of $0.4 millionin fees relating to professional services due to an increase in general corporate activities. We expect that our general and administrative expenses will remain relatively consistent during the fourth quarter of 2021 as compared to the third quarter of 2021.
Other expenses, net
Other expense, net was
$0.3 millionfor each of the three-month periods ended September 30, 2021and 2020. Other expense, net remained consistent due to similar interest rates on our capital balances and principal amount due on the term loan balance during the periods. 28 --------------------------------------------------------------------------------
Comparison of the completed nine months
The following table summarizes our operating results for the nine-month period ended.
Nine Months Ended September 30, 2021 2020 (in thousands) REVENUE Collaboration and service revenue
$ 3,3832,912 Total revenue 3,383 2,912 OPERATING EXPENSES Research and development 21,482 18,560 General and administrative 12,081 9,421 Total operating expenses 33,563 27,981 LOSS FROM OPERATIONS (30,180 ) (25,069 ) OTHER (EXPENSE) INCOME: Other expense, net (814 ) (652 ) Loss before income taxes (30,994 ) (25,721 ) Income tax provision 28 - Net loss $ (30,966 ) $ (25,721 )Revenue Our revenue for the nine months ended September 30, 2021consisted of $3.4 millionin revenue related to the Takeda, Daiichi and CANbridge agreements. Our revenue for the nine months ended September 30, 2020consisted of $2.9 millionin revenue under the Takeda agreement. The increase in revenue for the nine months ended September 30, 2021compared to the corresponding period in 2020 was related to revenue recognized under the April 2021CANbridge and Daiichi agreements which was partially offset by a decrease in revenue under the Takeda Agreement due to winding down activities.
Research and development costs
The following table summarizes our research and development expenses for the nine months ended.
Nine Months Ended September 30, 2021 2020 (Decrease)/Increase (in thousands) LB-001 external development and manufacturing costs
$ 5,905 $ 7,601(1,696 ) Personnel-related costs 7,270 4,700 2,570 Lab supplies 2,662 2,188 474 Other research and development costs 5,645 4,071 1,574
Total research and development expenditure
$ 2,922 Research and development expenses for the nine months ended
September 30, 2021were $21.5 million, compared to $18.6 millionfor the nine months ended September 30, 2020. The increase of approximately $2.9 millionwas primarily due to an increase of $2.6 millionin personnel-related costs related to an increase in headcount associated with the progress of both our partnered and internal programs, with a corresponding increase of $0.5 millionin lab supplies. During the nine months ended September 30, 2021as compared to the nine months ended September 30, 2020, there was an increase of $1.6 millionin other research and development costs, primarily driven by intellectual property licensing obligations due to certain of our licensors and increased collaboration costs. These increases were partially offset by a $1.7 milliondecrease in LB-001 external development and manufacturing costs, which primarily consisted of a $3.4 milliondecrease in contract manufacturing costs for LB-001 clinical supply offset by an increase of $1.8 millionin expenses related to the clinical trials.
General and administrative expenses
General and administrative expenses were
$12.1 millionfor the nine months ended September 30, 2021, compared to $9.4 millionfor the nine months ended September 30, 2020. The increase of approximately $2.7 millionwas primarily driven by an increase of $1.129
-------------------------------------------------------------------------------- million in personnel expenses as we increased our headcount to support our continued research and development activities as well as build our corporate and administrative functions. There was also a
$1.0 millionincrease in professional service fees due to an increase in corporate development and general corporate activities as well as $0.6 millionincrease in other general and administrative costs primarily related to an increase in corporate communications, insurance, and other general and administrative expenses.
Other expenses, net
Other expense, net was
$0.8 millionfor the nine months ended September 30, 2021compared to other expense, net of $0.7 millionfor the nine months ended September 30, 2020. The increase in other expense, net was primarily related to a decrease in interest income due to lower interest rates beginning in March 2020.
Liquidity and capital resources
Since our inception and through
September 30, 2021, we have not generated any sales revenue and have incurred significant losses and negative cash flows from our operations. As of September 30, 2021, we had cash and cash equivalents of $59.6 million, which we believe will be able to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2022. On a quarterly basis, we are required to conduct an accounting analysis under ASC 205-40, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, or ASC 205-40. The result of our ASC 205-40 analysis is that there is substantial doubt about our ability to continue as a going concern within one year of the date these financial statements are filed. While we intend to evaluate ways to enhance our liquidity and capital position, our efforts will largely depend on future developments that are highly uncertain and cannot be predicted with confidence at this time. Our plans to mitigate the conditions that raise substantial doubt include raising additional capital through equity or debt financings, payments from our collaborators, strategic transactions, or a combination of those approaches. These plans may also include the possible deferral of certain operating expenses unless and until additional capital is received. There can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us, or that we will be successful in deferring certain operating expenses. Cash Flows The following table summarizes our cash flows for the nine months ended September 30, 2021and 2020: Nine Months Ended September 30, 2021 2020 (in thousands) Net cash used in operating activities $ (13,834 ) $ (21,436 )Net cash (used in) provided by investing activities (734 ) 17,157 Net cash provided by financing activities 4,074
Net decrease in cash, cash equivalents and
$ (10,494 ) $ (968 )Operating Activities During the nine months ended September 30, 2021, net cash used in operating activities was $13.8 million, primarily related to our net loss adjusted for non-cash charges and changes in the components of working capital. The $7.6 milliondecrease in net cash used in operating activities during the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, was primarily driven by a $10.7 millionincrease in deferred revenue related to the upfront consideration received under the CANbridge and Daiichi agreements and partially offset by an increase in cash operating expenses. 30 --------------------------------------------------------------------------------
During the nine months ended
September 30, 2021, net cash used in investing activities was $0.7 millionrelated to the purchases of property and equipment. During the nine months ended September 30, 2020, net cash provided by investing activities was $17.2 millionprimarily related to the proceeds from our short-term investments that matured during the period which were not reinvested and instead held as cash and cash equivalents.
During the nine months ended
September 30, 2021, net cash provided by financing activities was $4.1 million, primarily related to net proceeds from sales of our common stock under an Open Market Sale Agreement with Jefferies LLCas the sales agent, or the Open Market Sale Agreement, of $5.1 millionwhich was partially offset by the repayment of principal on our term loans of $1.1 million. During the nine months ended September 30, 2020, net cash provided by financing activities was $3.3 million, primarily related to sales of common stock under the Jefferies LLCagreement of $3.2 million.
We expect to continue to incur a significant amount of expenses in connection with our ongoing activities for the foreseeable future. In particular, we will incur significant expenses related to the preclinical activities and clinical trials of our product candidates and any future product candidates.
We expect our expenses to increase dramatically if and like us:
• continue our research and the preclinical development of any candidate product
our current or future research programs;
• continue to conduct our clinical program for LB-001 and initiate and conduct clinical trials for any other product candidates we identify and develop;
• seek to identify, evaluate, acquire and / or develop additional research
additional programs and product candidates;
• seek marketing approvals for any successful product candidate
completes clinical trials; • develop, optimize, scale and validate a manufacturing process and analytical methods for any product candidates we may develop;
• establish and develop internal processes and analytical development
preclinical and clinical quality capabilities and production;
• obtain market acceptance of any product candidate that we can develop as viable
treatment options; • address competing technological and market developments;
• maintain, expand and protect our intellectual property portfolio and
provide reimbursement of third-party expenses related to our patent portfolio; • further develop our GeneRide and sAAVy platforms;
• hire additional technicians, quality, regulatory, clinical, scientific and
commercial personnel and add operational, financial and management information systems and personnel, including personnel to support our process and product development, manufacturing and planned future commercialization efforts;
• make royalties, milestones or other payments in the current and future framework
• establish and maintain supply chain and manufacturing relationships with
third parties who can provide adequate products and services, both
quantity, timing and quality, to support clinical development and market
the application of any candidate product for which we obtain regulatory approval;
• rent and construct new facilities, including offices and laboratories, to support
• comply with guidelines and regulations of good practice in terms of quality, or GXP,
including good laboratory practice, good clinical practice or GCP, and
current good manufacturing practices, or cGMP; establish a sale, marketing
and the distribution infrastructure to market any candidate product for
which we may obtain marketing approval; and • experience any delays or encounter issues with any of the above. 31
-------------------------------------------------------------------------------- We are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates because of the numerous risks and uncertainties associated with the development of our lead product candidate, LB-001, and any other product candidates and programs we may develop and because the extent to which we may enter into collaborations with third parties for development of LB-001 and any other product candidates we may develop is unknown. At
September 30, 2021, we had $59.6 millionof cash and cash equivalents on hand, which we currently expect will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2022. We have based these estimates on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Our future funding requirements, both near and long-term, will depend on many factors, including:
• the scope, progress, timing, costs and results of drug discovery,
preclinical development, laboratory tests and clinical trials for our
product candidates, including the ongoing development program for LB-001,
which includes our Phase 1/2 SUNRISE clinical trial of LB-001 in MMA, and process development and manufacturing activities for LB-001;
• the outcome, timing and cost of following the advice of and complying with
regulatory requirements and decisions made by the FDA, EMA and other regulatory authorities, including resolving any potential clinical holds that may be imposed on us;
• the impact of the COVID-19 pandemic on our ability to progress with our
research, development, manufacturing and regulatory efforts, including our
ability to advance and complete our Phase 1/2 SUNRISE clinical trial of LB-001;
• the costs of filing, pursuing, defending and implementing our patent claims
and other intellectual property rights;
• the cost of defending possible intellectual property disputes, including
patent infringement actions;
• the achievement of milestones or the occurrence of other developments which
trigger payments under any of our current agreements or other agreements that we
may enter into; • the extent to which we are obligated to reimburse, or entitled to
reimbursement of clinical trial costs and other research and development costs
under future collaboration agreements, if any; • the effect of competing technological and market developments;
• cost and timing of completion of process development and manufacturing
• the extent to which we engage in transactions, including collaboration,
merger, acquisition and licensing operations;
• our ability to establish and maintain collaborations on favorable terms, if
• the cost of establishing sales, marketing and distribution capacities for
LB-001 and any other product candidates in regions where we choose to commercialize our product candidates, if approved;
• the launch, progress, schedule and results of our marketing of
LB-001 and any other product candidate, if approved, for commercial sale;
• our ability to repay outstanding debt; and
• our ability to attract, hire and retain qualified personnel.
A change in the outcome of any of the above variables that are applicable to the development of a product candidate could mean a significant change in the costs and timing associated with the research and development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant trial delays due to patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development. Any significant delays in our programs may also require us to reevaluate our corporate strategy, resulting in the expenditure of significant resources and time. We may never succeed in obtaining regulatory approval for our product candidates or any future product candidates. Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our future cash needs through equity or debt financings, payments from our collaborators, strategic transactions, or a combination of those approaches. There is no assurance that we will be successful in obtaining any additional financing on terms acceptable to the Company, if at all. Additionally, the terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding, we may be required to delay, reduce or eliminate some or all of our research and development programs, preclinical and clinical development programs or future commercialization efforts, or we may be unable to continue operations. 32
Market sales of common shares
November 2019, we entered into the Open Market Sale Agreement. Under the terms of the Open Market Sale Agreement and the related prospectus supplement we filed with the SECin November 2019, we may sell shares of our common stock at the then current market prices, from time to time, having an aggregate value of up to $50.0 millionthrough Jefferies LLC. We pay up to a 3% cash commission to Jefferies LLCon the proceeds from sales under the program. During the nine months ended September 30, 2021, we issued 922,077 shares of our common stock at a weighted-average price of $5.70per share, resulting in net proceeds to us of $5.1 million. During the nine months ended September 30, 2020, we issued 436,477 shares of our common stock at a weighted-average price of $7.56, resulting in net proceeds to us of $3.2 million. At September 30, 2021, we had $41.3 millionin aggregate gross offering amount available under the Open Market Sale Agreement and the related prospectus supplement.
Obligations and contractual commitments
We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide additional information on our contractual obligations and commitments pursuant to Item 303 of Regulation S-K.
Important policies and judgments and estimates
Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in
the United States. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. There have been no significant changes to our critical accounting policies from those described in "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our 2020 10-K.
Emerging Growth Company Status
The Jumpstart Our Business Startups Act of 2012 permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies.
Off-balance sheet provisions
We have not entered into any off-balance sheet arrangements and do not hold any interests in variable interest entities.
Recently published accounting position papers
Refer to Note 2 of the Notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
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