LOGICBIO THERAPEUTICS, INC. Discussion and analysis by management of the financial position and operating results. (form 10-Q)

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.

Overview

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 States that 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
Kong and 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

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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 States
and one center in Saudi Arabia to 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 Genetics in 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 Commission granted 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,

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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 million through
underwritten public offerings and at-the-market sales of our common stock and
$33.1 million in 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 LLC and Horizon Technology Finance
Corporation, or the Loan Agreement, under which term loans in an aggregate
principal amount of $20.0 million were 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 million first tranche. In the second quarter of 2021, we met the
conditions to initiate drawdown of the $10.0 million second 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
million for 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

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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

Returned

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.

Operating Expenses

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

functions;

• 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.


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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 million principal 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, 2021 and 2020, we recorded
$0.3 million and $0.8 million, respectively, in interest expense, of which $0.2
million and $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 September 30, 2021 and 2020

The following table summarizes our operating results for the three months ended. September 30, 2021 and 2020:


                                      Three Months Ended
                                         September 30,
                                       2021          2020
                                        (in thousands)
REVENUE
Collaboration and service revenue   $    2,120     $    926
Total 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 )




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Revenue

Our revenue for the three months ended September 30, 2021 consisted of $2.1
million, relating to our agreements with CANbridge, Daiichi and Takeda. Our
revenue for the three months ended September 30, 2020 consisted of $0.9 million
in revenue under the Takeda agreement. The increase in revenue during the three
months ended September 30, 2021 compared to the corresponding period in 2020 was
related to revenue recognized under the April 2021 CANbridge 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. September 30, 2021 and 2020:


                                                    Three Months Ended
                                                       September 30,
                                                   2021             2020         Increase
                                                              (in thousands)
LB-001 external development and manufacturing
costs                                           $     2,207      $    1,714     $       493
Personnel-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 $ 7,806 $ 5,492

    $     2,314




Research and development expenses for the three months ended September 30, 2021
were $7.8 million, compared to $5.5 million for the three months ended
September 30, 2020. The increase of approximately $2.3 million was primarily due
to increases of $1.2 million in 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 million in lab supplies. In
addition, LB-001 external development and manufacturing costs increased $0.5
million mainly 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 million for the three months ended
September 30, 2021, compared to $3.2 million for the three months ended
September 30, 2020. The increase of approximately $1.1 million was primarily
driven by an increase of $0.4 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, as well as an increase of
$0.4 million in 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 million for each of the three-month periods ended
September 30, 2021 and 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.



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Comparison of the completed nine months September 30, 2021 and 2020

The following table summarizes our operating results for the nine-month period ended. September 30, 2021 and 2020:


                                       Nine Months Ended
                                         September 30,
                                      2021          2020
                                        (in thousands)
REVENUE
Collaboration and service revenue   $   3,383         2,912
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, 2021 consisted of $3.4
million in revenue related to the Takeda, Daiichi and CANbridge agreements. Our
revenue for the nine months ended September 30, 2020 consisted of $2.9 million
in revenue under the Takeda agreement. The increase in revenue for the nine
months ended September 30, 2021 compared to the corresponding period in 2020 was
related to revenue recognized under the April 2021 CANbridge 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. September 30, 2021 and 2020:


                                                    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 $ 21,482 $ 18,560

   $               2,922




Research and development expenses for the nine months ended September 30, 2021
were $21.5 million, compared to $18.6 million for the nine months ended
September 30, 2020. The increase of approximately $2.9 million was primarily due
to an increase of $2.6 million in 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 million in lab supplies. During
the nine months ended September 30, 2021 as compared to the nine months ended
September 30, 2020, there was an increase of $1.6 million in 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 million decrease in LB-001
external development and manufacturing costs, which primarily consisted of a
$3.4 million decrease in contract manufacturing costs for LB-001 clinical supply
offset by an increase of $1.8 million in expenses related to the clinical
trials.



General and administrative expenses

General and administrative expenses were $12.1 million for the nine months ended
September 30, 2021, compared to $9.4 million for the nine months ended
September 30, 2020. The increase of approximately $2.7 million was primarily
driven by an increase of $1.1

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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 million increase in professional
service fees due to an increase in corporate development and general corporate
activities as well as $0.6 million increase 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 million for the nine months ended September 30, 2021
compared to other expense, net of $0.7 million for 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

Overview

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, 2021 and 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         

3 311

Net decrease in cash, cash equivalents and

  restricted cash                                     $ (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
million decrease 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 million increase 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.

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Investment activities

During the nine months ended September 30, 2021, net cash used in investing
activities was $0.7 million related to the purchases of property and equipment.
During the nine months ended September 30, 2020, net cash provided by investing
activities was $17.2 million primarily 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.

Fundraising activities

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 LLC as the sales
agent, or the Open Market Sale Agreement, of $5.1 million which 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 LLC agreement of $3.2 million.



Funding requirements

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

licensing agreements;

• 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

organizational growth;

• 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.




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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 million of 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

Activities;

• 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

at all;

• 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
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Market sales of common shares

In 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 SEC in 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 million through Jefferies LLC. We pay up to a 3% cash commission to
Jefferies LLC on 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 $5.70 per 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 million
in 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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About Johnnie Hill

Johnnie Hill

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