The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many important factors, including those set forth in the ''Risk Factors'' section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in, or implied, by these forward-looking statements.
Overview
We are a clinical-stage genetic medicines company dedicated to transforming the lives of patients suffering from rare genetic diseases with significant unmet medical needs by addressing the underlying cause of the disease. Our proprietary platform is designed to utilize our human hematopoietic stem cell-derived adeno-associated virus vectors, or AAVHSCs, to precisely and efficiently deliver single administration genetic medicines in vivo through our gene therapy technology, our nuclease-free gene editing modality, or our gene therapy to express antibodies platform, or GTx-mAb. Our clinical programs include: HMI-103, an investigational gene editing candidate in clinical development for the treatment of patients with phenylketonuria, or PKU; HMI-203, an investigational gene therapy candidate in clinical development for the treatment of patients with mucopolysaccharidosis type II (MPS II), or Hunter syndrome; and HMI-102, an investigational gene therapy candidate in clinical development for the treatment of adult patients with PKU, for which enrollment is currently paused as discussed below. Additionally, we are developing a gene therapy candidate, HMI-104, from our GTx-mAb platform for the treatment of patients with paroxysmal nocturnal hemoglobinuria, or PNH, and we are seeking a partner for our metachromatic leukodystrophy, or MLD, program, HMI-204. Our diverse set of AAVHSCs allows us to precisely target, via a single injection, a wide range of disease-relevant tissues, including the liver, central nervous system, or CNS, peripheral nervous system, or PNS, bone marrow, cardiac and skeletal muscle and the eye. Our genetic medicines platform is designed to provide us the flexibility to choose the method we believe is best suited for each disease we pursue, based on factors such as the targeted disease biology, the biodistribution of our AAVHSCs to key tissues and the rate of cell division the disease-relevant tissues exhibit. Our product-development strategy is to continue to develop in parallel gene therapy and gene editing product candidates, while initially leveraging the experience from our gene therapy product development efforts to further advance our gene editing. We believe our technology platform will allow us to provide transformative cures using either modality.
The unique properties of our proprietary family of 15 AAVHSCs enable us to focus on a method of gene editing called gene integration, through the replacement of an entire diseased gene in the genome with a whole functional copy by harnessing the naturally occurring deoxyribonucleic acid, or DNA, repair process of homologous recombination, or HR. We believe our HR-driven gene editing approach will allow us to efficiently perform gene editing at therapeutic levels without unwanted on- and off-target modifications to the genome, and to directly measure and confirm those modifications in an unbiased manner to ensure only the intended changes are made. By utilizing the body's natural mechanism of correcting gene defects, we also avoid the need for exogenous nucleases, or bacteria-derived enzymes used in other gene editing approaches to cut DNA, which are known to significantly increase the risk of unwanted modifications.
Clinical-Stage Product Candidates
HMI-103: Gene Editing Candidate for the Treatment of Patients with PKU
We are currently enrolling our Phase 1 pheEDIT clinical trial with HMI-103, our
lead gene editing candidate in development for the treatment of classical PKU
and received Fast Track Designation for the treatment of neurocognitive and
neuropsychiatric manifestations of PKU secondary to phenylalanine hydroxylase
deficiency. In
In
The pheEDIT clinical trial is an open-label, dose-escalation study evaluating
the safety and efficacy of a single I.V. administration of HMI-103 and is
expected to enroll up to nine patients ages 18-55 years old who have been
diagnosed with classical PKU due to phenylalanine hydroxylase, or PAH,
deficiency. In addition to safety endpoints, the trial will measure serum
phenylalanine, or Phe, changes. The trial incorporates an immunosuppressive
regimen that includes a T-cell inhibitor used in combination with a
steroid-sparing regimen. We expect that the first patient in the pheEDIT
clinical trial will be dosed following requisite
26
--------------------------------------------------------------------------------
screening/run-in period to account for and more closely understand day-to-day Phe fluctuations of participants. If positive safety and efficacy results are established in adults, we plan to then enroll younger patients in subsequent HMI-103 clinical trials. We expect to provide an update on the pheEDIT clinical trial, including enrollment and site status, by the end of 2022.
In in vivo preclinical studies, we observed significant Phe reduction following
a single I.V. administration of the murine surrogate of HMI-103 in the PKU
disease model out to 43 weeks (end of study). In addition, using quantitative
molecular methods, we have demonstrated achievement of gene integration
efficiencies in a humanized murine liver model that corresponded with Phe
correction in the PKU murine model. At the
HMI-203: Investigational Gene Therapy for the Treatment of Adult Patients with MPS II (Hunter Syndrome)
In
The juMPStart clinical trial is an open-label, dose-escalation study evaluating the safety and efficacy of a single I.V. administration of HMI-203 and is expected to enroll up to nine male patients ages 18-45 years old who have been diagnosed with Hunter syndrome and are currently receiving enzyme replacement therapy, or ERT. Qualitative data on unmet medical needs obtained from ERT-treated adult MPS II patients and/or their caregivers helped inform our trial design. Patients and caregivers reported that weekly ERT infusions, surgeries and supportive therapies inadequately address range of motion and mobility, pain, and hearing loss, that there are burdens associated with ERT and other therapies, including frequency and duration of treatment, and painful and extended recoveries, that there is a high degree of anxiety regarding prognosis, longevity, need for more invasive surgeries, and financial challenges and that the expectations for a potential one-time gene therapy include the ability to maintain their current quality of life with ERT independence. Also, key opinion leaders surveyed supported our planned design for the juMPStart clinical trial, including our plan to discontinue ERT. In addition to safety endpoints, the trial will measure plasma I2S activity, urinary glycosaminoglycan, or GAG, levels, ERT discontinuation and other peripheral disease endpoints. We expect to provide an update on the juMPStart clinical trial, including enrollment and site status, by the end of 2022.
In preclinical studies, a single I.V. administration of HMI-203 resulted in robust biodistribution and human I2S enzyme expression, leading to significant reductions in heparan sulfate GAG levels in the cerebrospinal fluid, brain, liver, heart, spleen, lung and kidney, compared with the vehicle-treated disease model. HMI-203 also led to significant reductions in skeletal deformities compared with vehicle.
HMI-102: Investigational Gene Therapy for the Treatment of Adult Patients with PKU
On
In
On
27
--------------------------------------------------------------------------------
were required. We responded to the FDA regarding the clinical hold and included
in our response was a protocol amendment designed to address the
Earlier-Stage Product Candidates
In
We completed IND-enabling studies with HMI-202, an investigational gene therapy
for the treatment of patients with MLD. Applying the learnings from these
IND-enabling studies, in
Oxford Biomedica Solutions Transaction
On
Pursuant to the terms of the Purchase Agreement and a contribution agreement, or the Contribution Agreement, entered into between us and OXB Solutions prior to the closing of the OXB Solutions Transaction, or the Closing, we agreed to assign and transfer to OXB Solutions all of our assets that are primarily used in the manufacturing of AAV vectors for use in gene therapy or gene editing products including leasehold improvements and equipment, but excluding certain assets related to manufacturing or testing of our proprietary AAV vectors, or collectively, the Transferred Assets, in exchange for 175,000 common equity units in OXB Solutions, or Units, and OXB Solutions assumed from us, and agreed to pay, perform and discharge when due, all of our duties, obligations, liabilities, interests and commitments of any kind under, arising out of or relating to the Transferred Assets.
Effective as of the Closing, we sold to OXB, and OXB purchased from us, 130,000
Units, or the Transferred Units, in exchange for
Pursuant to the Amended and Restated Limited Liability Company Agreement of OXB Solutions, or the OXB Solutions Operating Agreement, which was executed in connection with the Closing, at any time following the three-year anniversary of the Closing, (i) OXB will have an option to cause us to sell and transfer to OXB, and (ii) we will have an option to cause OXB to purchase from us, in each case all of our equity ownership interest in OXB Solutions at a price equal to 5.5 times OXB Solutions' revenue for the immediately preceding 12-month period, subject to a specified maximum amount. Pursuant to the terms of the OXB
28
--------------------------------------------------------------------------------
Solutions Operating Agreement, we are entitled to designate one director on the
Board of Directors of OXB Solutions, which is currently
Concurrently with the Closing, we entered into certain ancillary agreements with OXB Solutions including a license and patent management agreement whereby OXB Solutions granted certain licenses to us, a supply agreement for a term of three years which includes certain annual minimum purchase commitments, a lease assignment pursuant to which we assigned all of our right, title and interest in, to and under our facility lease to OXB Solutions, a sublease agreement whereby OXB Solutions subleased certain premises in its facility to us, as well as several additional ancillary agreements.
Corporate Headquarters Lease
In
License Agreements
On
In
Management Team, Intellectual Property and Financial Overview
Our management team has a successful track record of discovering, developing and
commercializing therapeutics with a particular focus on rare diseases. We have a
robust intellectual property portfolio that includes a combination of issued
patents and pending patent applications that are owned by us or licensed from
third parties. The portfolio includes issued patents in
29
--------------------------------------------------------------------------------
expire in 2039 and may be eligible for patent term extension depending on the regulatory pathway of the product covered by the patent, and a foreign granted patent relating to our HMI-102 composition. We also own 12 United States and 89 foreign patent applications that are pending. We believe the breadth and depth of our intellectual property is a strategic asset that has the potential to provide us with a significant competitive advantage.
Since our inception in 2015 through
On
We were incorporated and commenced operations in 2015. Since our incorporation, we have devoted substantially all of our resources to organizing and staffing our Company, business planning, raising capital, developing our technology platform, advancing HMI-102, HMI-103 and HMI-203 through IND-enabling studies and into clinical trials, advancing HMI-202 and HMI-104 into IND-enabling studies, researching and identifying additional product candidates, developing and implementing manufacturing processes and manufacturing capabilities, building out our manufacturing and research and development space, enhancing our intellectual property portfolio and providing general and administrative support for these operations. To date, we have financed our operations primarily through the sale of common stock, through the sale of preferred stock, through funding from our collaboration partner and through proceeds received as a result of our transaction with OXB Solutions.
To date, we have not generated any revenue from product sales and do not expect
to generate any revenue from the sale of products in the foreseeable future, if
at all. We recognized
Since inception, we have incurred significant operating losses. Our net loss was
Our total operating expenses were
We have incurred significant capital expenditures for the buildout of a facility we have leased, including research and development labs, office space and manufacturing suites and the procurement of equipment and furniture for this facility and in support of our product development candidates and research initiatives. As a result of our agreement with Oxford, we are purchasing
30
--------------------------------------------------------------------------------
process development services and manufacturing product runs from the newly created OXB Solutions and therefore we expect an increase in these external CMO costs with an offsetting decrease in the total costs to run our manufacturing facility, including employee-related costs for the 125 manufacturing employees transitioning to the new company. We expect to incur additional capital expenditures in support of our research and development activities.
Because of the numerous risks and uncertainties associated with the development of our current and any future product candidates and our platform and technology and because the extent to which we may enter into collaborations with third parties for development of any of our product candidates is unknown, we are unable to predict the timing and amount of increased operating expenses and capital expenditures associated with completing the research and development of our product candidates. Our future capital requirements will depend on many factors, including:
•
the costs, timing, and results of our ongoing research and development efforts, including clinical trials;
•
the costs, timing, and results of our research and development efforts for current and future product candidates in our gene therapy and gene editing pipeline;
•
the costs and timing of process development scale-up activities, and the adequacy of supply of our product candidates for preclinical studies and clinical trials through CMOs, including OXB Solutions;
•
the costs and timing of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon their intellectual property rights;
•
the effect of competitors and market developments; and
•
our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements for our product candidates.
We believe that our existing cash, cash equivalents, and short-term investments
as of
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. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Because of the numerous risks and uncertainties associated with drug development, we are unable to predict when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. 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.
31
--------------------------------------------------------------------------------
Impact of the COVID-19 Pandemic
We are closely monitoring how the spread of the COVID-19 pandemic is affecting our employees, clinical trials, preclinical studies and overall operations. In response to the spread of COVID-19, we have taken steps to minimize the impact on our operations.
Operations - At the onset of the COVID-19 pandemic, to protect the health of our employees and the third parties with whom we interact, most office-based employees were asked to work from home. We have now implemented a return-to-work policy which provides for a hybrid of remote and in-office work, and we expect to continue to operate on such a semi-virtual basis, pending the future direction of the COVID-19 pandemic. Essential staffing levels in our operations remain in place, including key personnel in our laboratories. For those employees on-site, we continue to maintain shift schedules for our laboratories and a modified office layout to increase spacing capabilities, reduce inter-office risks and allow for business continuity. We have increased cleaning protocols throughout our entire facility and have implemented procedures regarding office visitors to better protect our employees.
Clinical trials - We are working with trial sites to mitigate COVID-19-related disruptions to our clinical trials in order to help ensure the safety of patients and healthcare professionals, and have deployed home-health services which include home visits for patient monitoring and reporting, as well as the utilization of a centralized laboratory for testing enrolled patients. Despite our best efforts, disruptions caused by the COVID-19 pandemic resulted in delays in enrolling our Phase 1/2 pheNIX clinical trial, and may result in delays or disruptions to any of our other current or planned clinical trials. In addition, we could incur unforeseen costs as a result of these delays. We will continue to evaluate the impact of the COVID-19 pandemic on our clinical trials and will make adjustments, as needed.
Preclinical studies - All of our ongoing and planned preclinical studies at external CROs are progressing, and we have accelerated shipments of reagents and supplies to avoid any disruption of activities. However, it is possible that the COVID-19 pandemic may have an impact in the future on our CROs' ability to complete critical studies required for the progression of these programs. In addition, any planned or potential meetings with the FDA or other regulatory authorities about any of our development programs could be delayed as these regulatory bodies respond to the COVID-19 pandemic.
At this time, there is significant uncertainty relating to the trajectory of the
COVID-19 pandemic and impact of related responses and as a result, we expect
that the COVID-19 pandemic may impact our business, revenues, results of
operations and financial condition. The impact of COVID-19 on our future results
will largely depend on future developments, which are highly uncertain and
cannot be predicted with confidence, such as the duration of the pandemic,
travel restrictions and social distancing in
Components of Our Results of Operations
Revenue
To date, we have not generated any revenue from product sales and do not expect
to generate any revenue from the sale of products in the foreseeable future. We
recorded
Operating Expenses
Our operating expenses since inception have consisted solely of research and development costs and general and administrative costs.
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:
•
salaries, benefits and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions;
32
--------------------------------------------------------------------------------
•
expenses incurred under agreements with third parties, including contract research organizations, or CROs, and other third parties that conduct research, preclinical activities and clinical trials on our behalf as well as CMOs, including OXB Solutions, that manufacture our product candidates for use in our preclinical testing, our clinical trials with HMI-102, HMI-103 and HMI-203 and additional potential future clinical trials;
•
costs of outside consultants, including their fees and related travel expenses;
•
the costs of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials; and
•
facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.
We expense research and development costs as incurred.
We typically use our employee and infrastructure resources across our development programs. We track outsourced development costs by product candidate or development program, but we do not allocate personnel costs, license payments made under our licensing arrangements or other internal costs to specific development programs or product candidates.
Research and development activities are central to our business model. We expect that our research and development expenses will decrease in connection with our ongoing development activities as we implement our plan for prioritizing our pipeline of programs while undertaking operational cost savings related to personnel expenses, professional fees, consulting expenses and other costs, including a modest workforce reduction commensurate with the pipeline prioritization. We anticipate expenses associated with pheEDIT, our Phase 1 clinical trial with HMI-103 for the treatment of PKU and juMPStart, our Phase 1 clinical trial with HMI-203 for the treatment of Hunter syndrome, as well as IND-enabling activities and clinical trials associated with HMI-104, our GTx-mAb product candidate for the treatment of PNH will increase. As a result of our agreement with Oxford, we will be purchasing process development services and manufacturing product runs from the newly created OXB Solutions and therefore would expect an increase in these costs with an offsetting decrease in the total costs to run our previously-owned manufacturing facility, including employee-related costs for the 125 manufacturing employees transitioning to the new company. We anticipate reduced research and development expenses associated with our Phase 1/2 pheNIX clinical trial with HMI-102 as we are pausing future patient enrollment, as well as reduced expenses associated with our optimized MLD program for which we are actively pursuing partnering opportunities, and reductions in other operational costs including personnel-related expenses, professional fees, consulting and other costs.
We cannot determine with certainty the duration and costs of future clinical trials or preclinical studies of our product candidates in development or any other future product candidate we may develop or if, when, or to what extent we will generate revenue from the commercialization and sale of any product candidate for which we obtain marketing approval. We may never succeed in obtaining marketing approval for any product candidate. The duration, costs and timing of clinical trials and development of our product candidates in development and any other future product candidate we may develop will depend on a variety of factors, including:
•
the scope, rate of progress, expense and results of current clinical trials, as well as of any future clinical trials, and other research and development activities that we may conduct;
•
uncertainties in clinical trial design and patient enrollment rates;
•
any delays in clinical trials as a result of the COVID-19 pandemic;
•
the actual probability of success for our product candidates, including the safety and efficacy results, 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.
A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the 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 delays in our clinical trials 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.
33
--------------------------------------------------------------------------------
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, human resources, legal, business development and administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters; professional fees for accounting, auditing, tax and consulting services; insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs, rent expense, maintenance of facilities and other operating costs.
We have incurred and expect to continue to incur increased expenses associated
with being a public company, including costs of accounting, audit, compliance
with the Sarbanes-Oxley Act of 2002, legal, regulatory and tax-related services
associated with maintaining compliance with Nasdaq and
Other Income
Other income consists of a gain on the sale of our manufacturing business and interest income earned on our cash, cash equivalents, and short-term investments. Market volatility resulting from the COVID-19 pandemic has and may continue to adversely impact our interest income.
Critical Accounting Estimates
Our management's discussion and analysis of financial condition and results of
operations is based on our condensed consolidated financial statements, which
have been prepared in accordance with generally accepted accounting principles
in
Our critical accounting policies are described under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations-
Critical Accounting Policies and Use of Estimates" in our Annual Report on Form
10-K for the year ended
Results of Operations
Comparison of Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three months ended June 30, (in thousands) 2022 2021 Change Collaboration revenue $ 802$ 2,187 $ (1,385 ) Operating expenses: Research and development 21,075 23,697 (2,622 ) General and administrative 8,034 9,042 (1,008 ) Total operating expenses 29,109 32,739 (3,630 ) Loss from operations (28,307 ) (30,552 ) 2,245 Other income: Interest income 474 52 422 Total other income 474 52 422 Loss before income taxes (27,833 ) (30,500 ) 2,667 Income tax benefit 105 - 105 Loss from equity method investment (1,361 ) - (1,361 ) Net loss$ (29,089 ) $ (30,500 ) $ 1,411 34
--------------------------------------------------------------------------------
Collaboration Revenue
Collaboration revenue for the three months ended
Research and Development Expenses
Three months ended June 30, (in thousands) 2022 2021 Change External development costs for clinical programs: HMI-102$ 3,946 $ 6,268$ (2,322 ) HMI-103 3,325 2,082 1,243 HMI-203 3,205 2,550 655 Other development-stage programs' external development costs 2,425 209 2,216 Employee-related costs 6,252 11,058 (4,806 ) Other research and development costs 1,922 1,530 392 Total research and development expenses$ 21,075 $ 23,697 $ (2,622 )
Research and development expenses for the three months ended
General and Administrative Expenses
General and administrative expenses for the three months ended
Interest Income
Interest income for the three months ended
35
--------------------------------------------------------------------------------
Income Tax Benefit
We recorded an income tax benefit of
Loss from
We record our share of gains or losses from OXB Solutions on a quarterly basis.
For the three months ended
Net Loss
Net loss for the three months ended
Comparison of Six Months Ended
The following table summarizes our results of operations for the six months
ended
Six months ended June 30, (in thousands) 2022 2021 Change Collaboration revenue$ 1,604 $ 31,492 $ (29,888 ) Operating expenses: Research and development 45,348 45,452 (104 ) General and administrative 22,181 17,703 4,478 Total operating expenses 67,529 63,155 4,374 Loss from operations (65,925 ) (31,663 ) (34,262 ) Other income: Gain on sale of business 131,249 - 131,249 Interest income 506 90 416 Total other income 131,755 90 131,665 Income (loss) before income taxes 65,830 (31,573 ) 97,403 Provision for income taxes (862 ) - (862 ) Loss from equity method investment (1,952 ) - (1,952 ) Net income (loss)$ 63,016 $ (31,573 ) $ 94,589 Collaboration Revenue
Collaboration revenue for the six months ended
36
--------------------------------------------------------------------------------
Research and Development Expenses
Six months ended June 30, (in thousands) 2022 2021 Change External development costs for clinical programs: HMI-102$ 9,775 $ 12,429 $ (2,654 ) HMI-103 5,308 4,279 1,029 HMI-203 5,112 3,639 1,473 Other development-stage programs' external development costs 3,832 555 3,277 Employee-related costs 18,342 22,374 (4,032 ) Other research and development costs 2,979 2,176 803 Total research and development expenses$ 45,348 $ 45,452 $ (104 )
Research and development expenses for the six months ended
General and Administrative Expenses
General and administrative expenses for the six months ended
Gain on Sale of Business
On
Interest Income
Interest income for the six months ended
37
--------------------------------------------------------------------------------
Provision for Income Taxes
We recorded an income tax provision of
Loss from
We record our share of gains or losses from OXB Solutions on a quarterly basis.
For the six months ended
Net Income (Loss)
Net income for the six months ended
Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and clinical development of our product candidates. We expect that our research and development and general and administrative costs and our capital expenditures will decrease in connection with our ongoing development activities as we implement our plan for prioritizing our pipeline of programs while undertaking operational cost savings related to personnel expenses, professional fees, consulting expenses and other costs, including a modest workforce reduction commensurate with the pipeline prioritization. We anticipate our expenses associated with our Phase 1 pheEDIT clinical trial with HMI-103, our Phase 1 juMPStart clinical trial with HMI-203, and development activities and clinical trials associated with HMI-104, our GTx-mAb product candidate for PNH will increase. We foresee increased expenses with CMOs, including OXB Solutions, to supply us with product for our preclinical and clinical studies, contract research organizations, or CROs, and other costs related to these programs. In addition, we expect to continue to incur additional costs associated with operating as a public company. Conversely, we anticipate reduced research and development expenses associated with our Phase 1/2 pheNIX clinical trial with HMI-102 as we are pausing future patient enrollment, as well as reduced expenses associated with our optimized MLD program for which we are actively pursuing partnering opportunities, and reductions in other operational costs including personnel-related expenses, professional fees, consulting and other costs. Also, as a result of our agreement with Oxford, we will be purchasing process development services and manufacturing production runs from the newly created OXB Solutions and therefore would expect an increase in these costs with an offsetting decrease in the total costs to run the manufacturing facility, including employee-related costs for the 125 manufacturing employees transitioned to the new company, since all of these costs are now being absorbed by OXB Solutions. As a result, 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.
We do not currently have any approved products and have never generated any
revenue from product sales. To date, we have financed our operations primarily
through the sale of common stock, the sale of preferred stock, through an
up-front payment and funding of research candidates from a collaboration partner
and through the gross proceeds from our transaction with OXB Solutions. Since
our inception in 2015, we have raised approximately
Equity Offerings and ATM Program
In
38
--------------------------------------------------------------------------------
"at-the-market" offerings, or the ATM, under our Registration Statement on Form
S-3 (File No. 333-237131) filed with the
On
Oxford Biomedica Solutions Transaction
On
Strategic Collaborations and Investments
On
Cash Flows
Our cash, cash equivalents, and short-term investments totaled
The following table summarizes our sources and uses of cash for each of the periods presented:
Six months ended June 30, (in thousands) 2022 2021 Net cash used in operating activities$ (61,530 ) $ (53,934 ) Net cash provided by (used in) investing activities 126,943 (98,973 ) Net cash provided by financing activities 440 51,789
Net change in cash, cash equivalents and restricted cash
39
--------------------------------------------------------------------------------
Operating Activities
Net cash used in operating activities for the six months ended
Net cash used in operating activities for the six months ended
Investing Activities
Net cash provided by investing activities for the six months ended
Net cash used in investing activities for the six months ended
Financing Activities
Net cash provided by financing activities for the six months ended
Net cash provided by financing activities for the six months ended
Funding Requirements
Operating expenses increased during the six months ended
Our expenses will increase as we:
•
pursue the preclinical and clinical development of our product candidates;
40
--------------------------------------------------------------------------------
•
pursue the preclinical and clinical development of other product candidates based on our gene therapy and gene editing technology;
•
further optimize our manufacturing processes and contract with CMOs, including OXB Solutions, to support our preclinical studies and clinical trials of our product candidates;
•
operate our business in our facility with expanded research and development labs and purchase additional equipment for our operations;
•
in-license or acquire the rights to other products, product candidates or technologies;
•
maintain, expand and protect our intellectual property portfolio;
•
hire additional personnel in research, regulatory and clinical development as well as management personnel; and
•
expand our operational, financial and management systems and increase personnel, including personnel to support our operations as a public company.
We believe that our existing cash, cash equivalents, and short term investments will enable us to fund our current projected operating expenses and capital expenditure requirements into the fourth quarter of 2024, including, subject to the impact of the COVID-19 pandemic on our business, additional development activities related to our Phase 1 pheEDIT clinical trial with HMI-103, our lead gene editing product candidate for PKU, our Phase 1 juMPStart clinical trial with HMI-203, our gene therapy product candidate for Hunter syndrome and our product candidate HMI-104 from our GTx-mAb platform for the treatment of PNH, the continued optimization of our manufacturing processes and the expansion of our intellectual property portfolio. We have based these estimates on assumptions that may prove to be imprecise, and we may use our available capital resources sooner than we currently expect.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical drugs, it is difficult to estimate with certainty the amount of our working capital requirements. Our future funding requirements will depend on many factors, including:
•
the progress, costs and results of our preclinical development and initial clinical trials for our product candidates;
•
the progress, costs and results of our additional research and preclinical development programs in gene therapy and gene editing;
•
the costs, scope and timing of process development and manufacturing activities with CMOs, including OXB Solutions, associated with our lead product development programs and other programs we advance through preclinical and clinical development;
•
our ability to establish and maintain strategic collaborations, licensing or other agreements and the financial terms of such agreements;
•
the scope, progress, results and costs of any product candidates that we may derive from our platform technology or any other product candidates that we may develop;
•
the extent to which we in-license or acquire rights to other products, product candidates or technologies; and
•
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims.
In addition, the magnitude and duration of the COVID-19 pandemic and its impact on our liquidity and future funding requirements is uncertain as of the filing date of this Quarterly Report on Form 10-Q, as the pandemic continues to evolve globally. See "Impact of the COVID-19 Pandemic" above and "Risk Factors- The COVID-19 pandemic has and could continue to adversely impact our business, including our preclinical studies and clinical trials." in Part II, Item 1A of this Quarterly Report on Form 10-Q for a further discussion of the possible impact of the COVID-19 pandemic on our business.
41
--------------------------------------------------------------------------------
Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaboration agreements, other third-party funding, strategic alliances, licensing arrangements and marketing and distribution arrangements.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders as common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, collaboration agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, 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. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.
Contractual Obligations
There have been no material changes to our contractual obligations during the
six months ended
© Edgar Online, source