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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number: 001-38707

 

LogicBio Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

47-1514975

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

65 Hayden Avenue, 2nd Floor, Lexington, MA 02421

(Address of principal executive offices) (Zip code)

(617) 245-0399

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

LOGC

 

Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer                  

 

Non-accelerated filer

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No  

As of May 5, 2021, the registrant had 32,160,459 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

 

Table of Contents

 

 

Page  

PART I.

FINANCIAL INFORMATION

4

Item 1.

Financial Statements (Unaudited)

4

 

Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020

4

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020

5

 

Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020

6

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020

7

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020

8

 

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

 

 

 

PART II.        

OTHER INFORMATION

28

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 5.

Other Information

28

Item 6.

Exhibits

29

Signatures

30

 

2


 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of this Quarterly Report on Form 10-Q. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect,” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements include statements concerning the following:

 

the initiation, cost, timing, progress and results of our current and future research and development activities and preclinical studies and potential future clinical trials, including our plans to initiate, advance and complete our SUNRISE Phase 1/2 clinical trial and other development activities for LB-001 in methylmalonic acidemia, or MMA;  

 

potential attributes and benefits of our GeneRide™ and sAAVy technology platforms and our existing or future product candidates;

 

our ability to take advantage of the modular nature of our GeneRide platform to simplify and accelerate development of new product candidates;

 

the potential benefits of strategic partnership agreements and our ability to enter into selective strategic partnership arrangements;

 

the timing of, and our ability to obtain and maintain, regulatory approvals for our existing or future product candidates;

 

our ability to quickly and efficiently identify and develop additional product candidates;

 

our ability to advance any product candidate into and successfully complete clinical trials;

 

our intellectual property position, including with respect to our trade secrets and the duration of our patent protection; and

 

our estimates regarding expenses, future revenues, capital requirements, the sufficiency of our current and expected cash resources and our need for additional financing.

These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in greater detail under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission, or SEC, on March 15, 2021 as may be amended or updated in subsequent filings with the SEC. In particular, the impact of the ongoing COVID-19 pandemic on our ability to progress with our research, development, manufacturing and regulatory efforts, including our plans to initiate, advance and complete our SUNRISE Phase 1/2 clinical trial for LB-001 in MMA, and the value of and market for our common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements in the United States and in other countries, and the effectiveness of actions taken globally to contain and treat the disease. Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, industry and future growth. Given these uncertainties, you should not rely on these forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Unless the context otherwise requires, the terms “LogicBio,” “LogicBio Therapeutics, Inc.,” the “Company,” “we,” “us,” “our” and similar references in this Quarterly Report on Form 10-Q refer to LogicBio Therapeutics, Inc. and its subsidiaries.

 

3


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

LogicBio Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

 

 

March 31, 2021

 

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

63,942

 

 

$

70,075

 

Accounts receivable

 

 

89

 

 

 

263

 

Prepaid expenses and other current assets

 

 

2,096

 

 

 

2,205

 

Total current assets

 

 

66,127

 

 

 

72,543

 

Property and equipment, net

 

 

1,780

 

 

 

1,815

 

Restricted cash

 

 

622

 

 

 

622

 

Operating lease right-of-use asset

 

 

5,395

 

 

 

5,660

 

TOTAL ASSETS

 

$

73,924

 

 

$

80,640

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

709

 

 

$

447

 

Accrued expenses and other current liabilities

 

 

3,133

 

 

 

2,701

 

Operating lease liabilities

 

 

1,126

 

 

 

1,094

 

Current portion of long-term debt

 

 

2,735

 

 

 

1,910

 

Total current liabilities

 

 

7,703

 

 

 

6,152

 

Long-term debt, net of issuance costs and discount

 

 

7,337

 

 

 

8,109

 

Operating lease liabilities, net of current portion

 

 

4,659

 

 

 

4,952

 

Total liabilities

 

 

19,699

 

 

 

19,213

 

COMMITMENTS AND CONTINGENCIES (Note 14)

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Preferred stock, par value of $0.0001 per share; 25,000,000 shares authorized;

   no shares issued and outstanding as of March 31, 2021 and December 31, 2020.

 

 

 

 

 

 

Common stock, par value of $0.0001 per share; 175,000,000 shares authorized; 32,058,206 and 31,775,748 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

164,495

 

 

 

161,415

 

Accumulated other comprehensive income

 

 

 

 

 

 

Accumulated deficit

 

 

(110,273

)

 

 

(99,991

)

Total stockholders’ equity

 

 

54,225

 

 

 

61,427

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

73,924

 

 

$

80,640

 

 

See notes to unaudited condensed consolidated financial statements.

 

4


 

 

LogicBio Therapeutics, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

REVENUE

 

 

 

 

 

 

 

 

Service revenue

 

$

461

 

 

$

1,021

 

Total revenue

 

 

461

 

 

 

1,021

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Research and development

 

 

6,419

 

 

 

7,173

 

General and administrative

 

 

4,059

 

 

 

3,192

 

Total operating expenses

 

 

10,478

 

 

 

10,365

 

LOSS FROM OPERATIONS

 

 

(10,017

)

 

 

(9,344

)

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

Interest income

 

 

6

 

 

 

167

 

Interest expense

 

 

(271

)

 

 

(272

)

Other expense, net

 

 

 

 

 

(6

)

Total other expense, net

 

 

(265

)

 

 

(111

)

Loss before income taxes

 

 

(10,282

)

 

 

(9,455

)

Income tax provision

 

 

 

 

 

 

Net loss

 

$

(10,282

)

 

$

(9,455

)

Net loss per share—basic and diluted

 

$

(0.32

)

 

$

(0.41

)

Weighted-average common stock outstanding—basic and diluted

 

 

31,933,794

 

 

 

23,175,802

 

 

See notes to unaudited condensed consolidated financial statements.

 

5


 

 

LogicBio Therapeutics, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Net loss

 

$

(10,282

)

 

$

(9,455

)

Other comprehensive income:

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investments

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

Comprehensive loss

 

$

(10,282

)

 

$

(9,455

)

 

See notes to unaudited condensed consolidated financial statements.

 

6


 

 

LogicBio Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

$0.0001 Par Value

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

BALANCE, January 1, 2020

 

 

23,036,943

 

 

$

3

 

 

$

109,640

 

 

$

14

 

 

$

(67,370

)

 

$

42,287

 

Vesting of restricted stock

 

 

160,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options

 

 

19,378

 

 

 

 

 

 

84

 

 

 

 

 

 

 

 

 

84

 

Realized gain on investments

 

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

 

 

 

(14

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

805

 

 

 

 

 

 

 

 

 

805

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,455

)

 

 

(9,455

)

BALANCE, March 31, 2020

 

 

23,216,661

 

 

$

3

 

 

$

110,529

 

 

$

 

 

$

(76,825

)

 

$

33,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, January 1, 2021

 

 

31,775,748

 

 

$

3

 

 

$

161,415

 

 

$

 

 

$

(99,991

)

 

$

61,427

 

Vesting of restricted stock

 

 

31,372

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock related to at-the-market offerings, net of issuance costs of $65

 

 

251,086

 

 

 

 

 

 

2,091

 

 

 

 

 

 

 

 

 

2,091

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

989

 

 

 

 

 

 

 

 

 

989

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,282

)

 

 

(10,282

)

BALANCE, March 31, 2021

 

 

32,058,206

 

 

$

3

 

 

$

164,495

 

 

$

 

 

$

(110,273

)

 

$

54,225

 

 

See notes to unaudited condensed consolidated financial statements.

 

7


 

 

LogicBio Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(10,282

)

 

$

(9,455

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

138

 

 

 

105

 

Net amortization of premiums and discounts on investments

 

 

 

 

 

26

 

Stock-based compensation expense

 

 

989

 

 

 

805

 

Non-cash interest expense

 

 

53

 

 

 

52

 

Non-cash lease expense

 

 

269

 

 

 

305

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

109

 

 

 

(993

)

Accounts receivable

 

 

174

 

 

 

 

Accounts payable

 

 

262

 

 

 

1,557

 

Accrued expenses and other current liabilities

 

 

215

 

 

 

(1,005

)

Deferred revenue

 

 

 

 

 

1,065

 

Net cash used in operating activities

 

 

(8,073

)

 

 

(7,538

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Maturities of investments

 

 

 

 

 

17,500

 

Purchase of property and equipment

 

 

(151

)

 

 

 

Net cash (used in) provided by investing activities

 

 

(151

)

 

 

17,500

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

 

 

84

 

Net proceeds from at-the-market common stock issuances

 

 

2,091

 

 

 

 

Net cash provided by financing activities

 

 

2,091

 

 

 

84

 

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED

   CASH

 

 

(6,133

)

 

 

10,046

 

Cash, cash equivalents and restricted cash at beginning of year

 

 

70,697

 

 

 

33,875

 

Cash, cash equivalents and restricted cash at end of period

 

$

64,564

 

 

$

43,921

 

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED

   CASH

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

63,942

 

 

$

43,153

 

Short-term restricted cash

 

 

 

 

 

146

 

Long-term restricted cash

 

 

622

 

 

 

622

 

Total cash, cash equivalents and restricted cash

 

$

64,564

 

 

$

43,921

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

218

 

 

$

220

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

 

 

 

 

 

 

 

 

Property and equipment purchases in accrued expenses

 

$

70

 

 

$

 

 

See notes to unaudited condensed consolidated financial statements.

 

8


 

 

LogicBio Therapeutics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands, except share and per share data)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Business Overview

LogicBio Therapeutics, Inc. (“LogicBio” or the “Company”) was incorporated in 2014 as a Delaware corporation. Its principal offices are in Lexington, Massachusetts. LogicBio is a genome editing company focused on developing medicines to durably treat rare diseases in patients with significant unmet medical need using GeneRide, the Company’s proprietary technology platform. The Company’s GeneRide technology enables the site-specific integration of a therapeutic transgene without nucleases or exogenous promoters by harnessing the native process of homologous recombination. LogicBio is developing LB-001, a wholly owned genome editing program leveraging GeneRide for the treatment of methylmalonic acidemia (“MMA”). In addition, the Company has a research collaboration with Takeda Pharmaceutical Company Limited (“Takeda”) to develop LB-301, an investigational therapy leveraging GeneRide for the treatment of the rare pediatric disease Crigler-Najjar syndrome (“CN”).

LogicBio is also developing a next generation capsid platform, sAAVy, for use in gene editing and gene therapy. At the American Society of Gene & Cell Therapy (“ASGCT”) conference in May 2020, data was presented showing that the capsids delivered highly efficient functional transduction of human hepatocytes in a humanized mouse model. The data also showed the capsids exhibited improved manufacturability with low levels of pre-existing neutralizing antibodies in human samples. Based on these data, the Company believes the top-tier capsid candidates from this effort demonstrated the potential to achieve significant improvements over benchmark adeno-associated viruses (“AAVs”) that are currently in clinical development. The Company is developing these highly potent vectors for internal development candidates and potentially for further business development collaborations.

Based on the Company’s GeneRide technology, LogicBio is developing its lead product candidate, LB-001, to treat MMA in pediatric patients with MMA. The SUNRISE trial is a multi-center, open-label, Phase 1/2 clinical trial designed to assess the safety and tolerability of a single intravenous infusion of LB-001 in pediatric patients with MMA characterized by methylmalonyl-CoA mutase gene (“MMUT”) mutations. We expect six leading centers in the United States and one center in Saudi Arabia to participate in the SUNRISE Phase 1/2 trial.

LogicBio believes that achieving clinical proof of concept in an inherited liver disease such as MMA will validate the Company’s platform technology, including its potential application to other organs and diseases. In addition to MMA and CN, LogicBio has demonstrated proof of concept of its platform in hemophilia B and alpha-1-antitrypsin deficiency (“A1ATD”) animal disease models. The Company expects to select future product candidates from these genetic diseases or others addressed by targeting the liver initially, and later by targeting other tissues such as the central nervous system, or CNS, muscle, or other tissues.

In April 2021, the Company announced a research collaboration with Daiichi Sankyo for the development of treatments for two indications based on GeneRide. Also in April 2021, the Company announced a strategic collaboration with CANbridge Care Pharma Hong Kong Limited (“CANbridge”) for an exclusive option to license LB-001 in Greater China (China, Taiwan, Hong Kong and Macau) and a worldwide license with respect to AAV sL65, the first capsid produced from the Company’s proprietary sAAVy platform, to support development and commercialization of CANbridge’s gene therapy programs for Fabry disease and Pompe disease, with options for two additional indications.  

Since its inception, the Company has devoted the majority of its efforts to business planning, research and development, developing markets, raising capital, and recruiting management and technical staff. The Company is subject to a number of risks similar to those of other companies conducting high-risk, early-stage research and development of product candidates. Principal among these risks are a dependency on key individuals and intellectual property, competition from other products and companies, and the technical risks associated with the successful research, development and clinical manufacturing of its product candidates. The Company’s success is dependent upon its ability to continue to raise additional capital in order to fund ongoing research and development, meet its obligations and, ultimately, obtain regulatory approval of its products, successfully commercialize its products, generate revenue and attain profitable operations.

 

COVID-19 Impact

 

The Company is closely monitoring the COVID-19 pandemic in order to promote the safety of its personnel and to continue advancing its research and development activities. Since mid-March 2020, the Company has ceased all business travel and most of its non-laboratory employees have been working remotely. After being limited to working in shifts on-premises through early July, the

9


 

Company’s laboratory employees have returned to normal working schedules on-premises to conduct in-house research and development activities with social distancing and other protective measures. The Company plans to maintain these or similar restrictions until it believes employees can fully resume such activities in accordance with federal, state and local requirements and guidelines.

The COVID-19 pandemic did not have a material impact on the Company’s results of operations, cash flow and financial position as of and for the three months ended March 31, 2021. However, the full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial position will depend on future developments that are uncertain and cannot be accurately predicted.

Liquidity and Capital Resources

The Company has had recurring losses since inception and incurred a loss of $10,282 during the three months ended March 31, 2021. Net cash used in operations for the three months ended March 31, 2021 was $8,073. The Company expects to continue to generate operating losses and use cash in operations for the foreseeable future. As of March 31, 2021, the Company had cash and cash equivalents of $63,942. The Company believes that its cash and cash equivalents at March 31, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next twelve months from the date these financial statements are issued.

The Company will require substantial additional capital to fund its research and development and ongoing operating expenses. Management’s plans to mitigate this risk include raising additional capital through equity or debt financings, or through strategic transactions. 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 the Company will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to the Company, or that the Company will be successful in deferring certain operating expenses. While there can be no assurance the Company will be able to successfully reduce operating expenses or raise additional capital, management believes its historical success in managing cash flows and obtaining capital will continue in the foreseeable future.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by the Company in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 15, 2021.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments which are necessary for a fair statement of the Company’s financial position as of March 31, 2021, consolidated results of operations for the three months ended March 31, 2021 and 2020 and cash flows for the three months ended March 31, 2021 and 2020. Such adjustments are of a normal and recurring nature. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2021.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 15, 2021. Since the date of those financial statements, there have been no material changes to its significant accounting policies.

10


 

Recently Issued Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848).  This ASU provides optional expedients and exceptions for applying U.S. GAAP to transactions affected by reference rate (e.g., LIBOR) reform if certain criteria are met, for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.  The ASU is effective as of March 12, 2020 through December 31, 2022.  The Company will evaluate transactions or contract modifications, including any related to its July 2019 loan and security agreement which uses LIBOR as a reference rate, occurring as a result of reference rate reform and determine whether to apply the optional guidance on an ongoing basis. The ASU is currently not expected to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

 

3. FAIR VALUE MEASUREMENTS

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

 

Description

 

March 31, 2021

 

 

Quoted Prices in

Active Markets

for Identical

Assets (Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Other

Observable

Inputs

(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds and other cash equivalents

 

$

63,168

 

 

$

63,168

 

 

$

 

 

$

 

Total financial assets

 

$

63,168

 

 

$

63,168

 

 

$

 

 

$

 

 

Description

 

December 31,

2020

 

 

Quoted Prices in

Active Markets

for Identical

Assets (Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Other

Observable

Inputs

(Level 3)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds and other cash equivalents

 

$

69,277

 

 

$

69,277

 

 

$

 

 

$

 

Total financial assets

 

$

69,277

 

 

$

69,277

 

 

$

 

 

$

 

 

When developing fair value estimates, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. When available, the Company uses quoted market prices to measure fair value. The valuation technique used to measure fair value for the Company's Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that use primarily market-based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions are not available, the Company is required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument.

 

The Company did not have any transfers of assets between levels of the fair value measurement hierarchy during the three months ended March 31, 2021.

4. INVESTMENTS

As of March 31, 2021 and December 31, 2020, the Company did not hold any short-term or long-term investments.

 

11


 

 

5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities at March 31, 2021 and December 31, 2020 consisted of the following:

 

 

 

March 31,

2021

 

 

December 31,

2020

 

Accrued compensation and benefits

 

$

881

 

 

$

1,200

 

Accrued professional services

 

 

1,625

 

 

 

1,058

 

Accrued lab supplies

 

 

293

 

 

 

71

 

Other

 

 

334

 

 

 

372

 

Total accrued expenses and other current liabilities

 

$

3,133

 

 

$

2,701

 

 

Accrued compensation and benefits consists primarily of accrued bonuses. Accrued professional services consists primarily of consulting services, legal services and services provided by contract research organizations (“CRO”) and contract manufacturing organizations (“CMO”). Accrued lab supplies consists primarily of reagents and lab consumables.  

6. DEBT

On July 2, 2019 (the “Closing Date”), the Company entered into a loan and security agreement (the “Loan Agreement”), for term loans with Oxford Finance LLC (“Oxford”) and Horizon Technology Finance Corporation (“Horizon,” and, together with Oxford, the “Lenders”). The Loan Agreement allows the Company to borrow up to $20,000 issuable in two equal tranches (the “Term Loans”). On the Closing Date, the first tranche of $10,000 was drawn down by the Company (the “Term A Loan”). In September 2020 and March 2021, the Company entered into amendments to the Loan Agreement, each of which extended the availability of the $10,000 second loan tranche subject to certain conditions. Pursuant to the third amendment entered in March 2021, the second loan tranche is available to the Company commencing on the date by which certain development milestones shall have occurred and ending on the earliest of (i) the date that is thirty (30) days immediately following the date by which such development milestones shall have occurred, (ii) September 30, 2021 and (iii) the occurrence of an Event of Default (as defined in the Loan Agreement).

The outstanding loan balance will accrue interest at the greater of (i) the rate of the one-month U.S. LIBOR rate plus 6.25% and (ii) 8.75%. The Loan Agreement provides for an interest only period until July 1, 2021, followed by thirty-six equal monthly payments of principal and interest continuing through June 1, 2024 (the “Maturity Date”). The Company has the option to prepay the outstanding balance prior to maturity, subject to a prepayment fee of 1.0% to 3.0% depending upon when the prepayment occurs. Upon repayment of the Term Loans, the Company is required to make a final payment to the Lenders equal to 4.5% of the original principal amount of the Term Loans funded which will be accrued by charges to interest expense over the term of the loans using the effective interest method.

In conjunction with the Loan Agreement, the Company issued 15,686 of common stock warrants (“Warrants”) to the Lenders at a per share exercise price of $12.75, a maximum contractual term of 10 years and exercisable immediately. The fair value of the Warrants was accounted for as a debt discount and calculated to be approximately $136 using the Black-Scholes method. The Company determined the Warrants met the criteria for equity classification, and, as such, the fair value of the Warrants is recorded as additional paid-in capital on the condensed consolidated balance sheets. Finally, the Company incurred issuance costs of approximately $150. Both the debt discount and issuance costs will be accreted to Notes payable by charges to interest expense over the term of the Term A Loan using the effective interest method.

The Loan Agreement contains customary representations, warranties and covenants and also includes customary events of default. Events of default include, among other things, the Company’s failure to pay amounts due, a breach of certain covenants, a material adverse change event, misrepresentations and judgments. Upon the occurrence of an event of default, a default interest rate of an additional 5.00% per annum may be applied to the outstanding loan balances, and the Lenders may declare all outstanding obligations immediately due and payable. Borrowings under the Loan Agreement are collateralized by substantially all the Company’s assets, other than its intellectual property, which include maintaining certain cash balances in controlled accounts.

12


 

Interest expense was $271 and $272 for the three months ended March 31, 2021 and 2020, respectively. The effective rate on the Loan Agreement, including the amortization of the debt discount and issuance costs, and accretion of the final payment, was 9.7% at March 31, 2021. The components of the long-term debt balance are as follows:

 

 

 

March 31,

2021

 

 

December 31,

2020

 

Notes payable, gross

 

$

10,000

 

 

$

10,000

 

Less: Unamortized debt discount and

   issuance costs

 

 

(154

)

 

 

(175

)

Accretion of final payment fee

 

 

226

 

 

 

194

 

Carrying value of notes payable

 

 

10,072

 

 

 

10,019

 

Less: Current portion of long-term debt

 

 

(2,735

)

 

 

(1,910

)

Long-term debt, net of issuance costs and

   discount

 

$

7,337

 

 

$

8,109

 

 

As of March 31, 2021, the estimated future principal payments due were as follows:

 

 

 

As of March 31, 2021

 

2021

 

$

1,945

 

2022

 

 

3,333

 

2023

 

 

3,333

 

2024

 

 

1,389

 

Thereafter

 

 

 

Total principal payments

 

$

10,000

 

 

7. STOCK-BASED COMPENSATION

Equity Incentive Plans

In December 2014, the Company adopted the LogicBio Therapeutics, Inc. 2014 Equity Incentive Plan, as amended (the “2014 Plan”), for the issuance of stock options and other stock-based awards. In October 2018, the Company’s 2018 Equity Incentive Plan (the “2018 Plan”) became effective and as a result, no further awards will be made under the 2014 Plan. The 2018 Plan was established to provide equity-based ownership opportunities for employees and directors, as well as outside consultants and advisors. Any awards granted under the 2014 Plan prior to the adoption of the 2018 Plan remained outstanding in accordance with their respective terms.

Under the 2018 Plan, there is an annual increase on January 1 of each year from 2019 until 2028, by the lesser of (i) 4% of the number of shares of common stock outstanding on December 31 of the prior year and (ii) an amount determined by the Board. On January 1, 2021, the Company increased the number of shares available for future grant under the 2018 Plan by 1,272,547 shares. At March 31, 2021, there were 1,342,803 shares available for future grant under the 2018 Plan.

The 2018 Plan is administered by the Board. The exercise prices, vesting and other restrictions are determined at the discretion of the Board, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the common stock on the date of grant. Stock options awarded under the 2018 Plan expire 10 years after the grant date, unless the Board sets a shorter term. Vesting periods for awards under the 2018 Plan are determined at the discretion of the Board. Incentive stock options granted to employees and shares of restricted stock granted to employees, officers, members of the Board, advisors, and consultants of the Company typically vest over four years. Non-statutory options, shares of restricted stock and restricted stock units (“RSU”) granted to employees, officers, members of the Board, advisors, and consultants of the Company typically vest over one to four years.

13


 

Stock Options

During the three months ended March 31, 2021 and 2020, the Company granted options to purchase 1,087,456 and 714,203 shares of common stock, respectively, with a weighted-average grant date fair value per share of $5.16 and $4.74, respectively. The Company recorded stock-based compensation expense for options granted of $839 and $761 during the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, there were 4,060,357 outstanding options, of which 2,314,809 were unvested, and $10,771 of unrecognized stock-based compensation expense to be recognized over a weighted-average period of 3.2 years.

Restricted Common Stock

The Company has granted shares of restricted common stock with time-based and performance-based vesting conditions from time to time. The Company did not grant any restricted common stock during the three months ended March 31, 2021 or 2020. The Company recorded stock-based compensation expense for restricted common stock granted of $30 and $44 during the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, there were 24,535 shares of unvested restricted common stock outstanding and $90 of unrecognized stock-based compensation expense related to unvested restricted common stock to be recognized over a weighted-average period of 0.8 years.

Restricted Stock Units

The Company has granted RSUs with time-based conditions from time to time. Each RSU represents the right to receive one share of the Company’s common stock upon vesting. The Company has issued RSUs that vest based on the passage of time assuming continued service with the Company. The fair value is calculated based upon the Company’s closing stock price on the date of grant, and the stock-based compensation expense is recognized over the vesting period. During the three months ended March 31, 2021, the Company granted 5,939 RSUs. During the three months ended March 31, 2020, the Company did not grant any RSUs. The Company recorded stock-based compensation for RSUs granted of $120 and $0 during the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, there were 88,430 unvested RSUs outstanding and $69 of unrecognized stock-based compensation expense related to unvested RSUs to be recognized over a weighted-average period of 0.5 years.

Stock-Based Compensation Expense

Total stock-based compensation expense recorded as research and development and general and administrative expenses, respectively, for employees, directors and non-employees for the three months ended March 31, 2021 and 2020 is as follows:

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Research and development

 

$

304

 

 

$

295

 

General and administrative

 

 

685

 

 

 

510

 

Total stock-based compensation expense

 

$

989

 

 

$

805

 

 

8. STOCKHOLDERS’ EQUITY

Open Market Sale Agreement

On November 15, 2019, the Company entered into an Open Market Sale Agreement (the “Open Market Sale Agreement”) with Jefferies LLC, as agent (“Jefferies”), pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $50,000 (the “Open Market Shares”) from time to time through Jefferies (the “Open Market Offering”).

14


 

Under the Open Market Sale Agreement, Jefferies may sell the Open Market Shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Exchange Act of 1934, as amended. The Company may sell the Open Market Shares in amounts and at times to be determined by the Company from time to time subject to the terms and conditions of the Open Market Sale Agreement, but it has no obligation to sell any of the Open Market Shares in the Open Market Offering.

The Company or Jefferies may suspend or terminate the offering of Open Market Shares upon notice to the other party and subject to other conditions. The Company has agreed to pay Jefferies commissions for its services in acting as agent in the sale of the Open Market Shares in the amount of up to 3.0% of gross proceeds from the sale of the Open Market Shares pursuant to the Open Market Sale Agreement. The Company has also agreed to provide Jefferies with customary indemnification and contribution rights.

During the three months ended March 31, 2021, the Company issued 251,086 Open Market Shares at a weighted-average price of $8.59 per share, resulting in net proceeds to the Company of $2,091. During the three months ended March 31, 2020, the Company did not issue any Open Market Shares. At March 31, 2021, the Company had $44,352 in aggregate gross offering amount available under the Open Market Sale Agreement.

 

9. REVENUE

In January 2020, the Company entered into a research agreement with Takeda for the development of product candidate LB-301 to treat CN. Under the terms of the Takeda Agreement, Takeda will fund all research and development activities related to the development of LB-301 under a pre-agreed upon research plan (the “Research Plan”). The Takeda Agreement also provides Takeda with an exclusive, non-binding option to enter into a license agreement to the LB-301 program upon the exercise of an option (the “License Option”).

The Company assessed the Takeda Agreement in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) and concluded that it represents a contract with a customer and is within the scope of ASC 606. The promised goods and services represent one combined performance obligation and the entire transaction price will be allocated to that single combined performance obligation. In addition, the Company concluded that the License Option does not provide any discounts or other rights. Terms related to an exclusive license negotiated after the exercise of the License Option will be part of a separate contract and reflect applicable standalone selling prices. As such, the Company concluded the License Option is not considered to be a material right.

Under the Takeda Agreement, Takeda is obligated to reimburse the Company for the costs incurred under the Research Plan. Costs incurred are billed by the Company to Takeda from time to time. The Company elected to recognize revenue under the "right to invoice" practical expedient based on the Company's right to invoice Takeda at an amount that approximates the value to the customer and the performance completed to date. The Company recognized $461 and $1,021 as service revenue under the Takeda Agreement during the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, there was a balance of $89 in accounts receivable for work billed but not yet paid under the agreement.

 

10. INCOME TAXES

For the three months ended March 31, 2021 and the year ended December 31, 2020, the Company maintained a full valuation allowance on federal and state deferred tax assets since management does not forecast the Company to be in a taxable position in the near future.

11. LOSS PER SHARE

Basic loss per share is computed by dividing net loss by the weighted-average shares of common stock outstanding, without consideration to common stock equivalents:

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Numerator:

 

 

 

 

 

 

 

 

Net loss

 

$

(10,282

)

 

$

(9,455

)

Denominator:

 

 

 

 

 

 

 

 

Weighted-average common stock outstanding

 

 

31,933,794

 

 

 

23,175,802

 

Net loss per share — basic and diluted

 

$

(0.32

)

 

$

(0.41

)

15


 

 

 

The Company’s potentially dilutive shares, which include any outstanding stock options, warrants and unvested restricted stock, are considered to be common stock equivalents and are only included in the calculation of diluted net loss when their effect is dilutive.

The Company excluded the following potential common stock equivalents from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect for the three months ended March 31, 2021 and 2020.

 

 

 

March 31,

2021

 

 

March 31,

2020

 

Unvested restricted common stock

 

 

24,535

 

 

 

83,047

 

Unvested restricted stock units

 

 

88,430

 

 

 

 

Options to purchase common stock

 

 

4,060,357

 

 

 

2,930,587

 

Term A Loan warrants

 

 

15,686

 

 

 

15,686

 

 

12. LEASES

The Company has historically entered into lease arrangements for its facilities and certain equipment. As of March 31, 2021, the Company had one operating lease with required future minimum payments related to its headquarters in Lexington, MA.

In November 2019, the Company entered into a lease agreement for office, laboratory and vivarium space located at 65 Hayden Avenue Lexington, Massachusetts (“65 Hayden Ave Lease”) to replace the Company’s prior headquarters in Cambridge, Massachusetts. Under the terms of the 65 Hayden Ave Lease, the Company leases approximately 23,901 square feet of space and pays an initial annual base rent of approximately $1,494, which is subject to scheduled annual increases, plus certain operating expenses and taxes. The Company took possession of the space on April 1, 2020 (“Lease Commencement Date”) and the lease will continue through July 1, 2025 (“Lease Termination Date”). The Company has an option to extend the lease for a single additional term of 5 years. Upon execution of the 65 Hayden Ave Lease, the Company executed a $622 cash-collateralized letter of credit. Lease payments are due in monthly installments through the Lease Termination Date.

At the Lease Commencement Date, the Company performed a lease assessment under the guidance prescribed in ASC Topic 842, Leases (“ASC 842”), and concluded that the 65 Hayden Ave Lease was an operating lease. As such, the Company recorded an operating lease right-of-use asset and corresponding operating lease liability on the consolidated balance sheets of $6,428 which reflected the net present value of future payments under the lease. The discount rate used to calculate the net present value of future payments was the Company’s incremental borrowing rate at the Lease Commencement Date, which was 7.6%. As of March 31, 2021, the Company was not reasonably certain that the renewal option would be exercised.

Operating Leases

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases for the three months ended March 31, 2021 and 2020:

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Operating leases

 

 

 

 

 

 

 

 

Lease cost

 

 

 

 

 

 

 

 

Operating lease cost

 

$

378

 

 

$

325

 

Variable lease cost

 

 

215

 

 

 

98

 

Total lease cost

 

$

593

 

 

$

423

 

Other year-to-date lease information

 

 

 

 

 

 

 

 

Operating cash flows used

   for operating leases

 

$

373

 

 

$

321

 

Operating lease liabilities

   arising from obtaining

   right-of-use assets

 

$

 

 

$

 

16


 

 

 

The following table contains a summary of the lease liabilities recognized on the Company’s condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020:

 

 

 

As of March 31, 2021

 

 

As of December 31, 2020

 

Other operating lease information

 

 

 

 

 

 

 

 

Operating lease liabilities — short-term

 

$

1,126

 

 

$

1,094

 

Operating lease liabilities — long-term

 

$

4,659

 

 

$

4,952

 

Weighted-average remaining lease term

 

4.3 years

 

 

4.5 years

 

Weighted-average discount rate

 

 

7.60

%

 

 

7.60

%

 

The variable lease costs for the three months ended March 31, 2021 and 2020 include common area maintenance and other operating charges. As the Company’s leases do not provide an implicit rate, the Company utilized its incremental borrowing rate based on what it would normally pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments at the commencement date in determining the present value of lease payments.

Future minimum lease payments under the Company’s operating lease as of March 31, 2021 and December 31, 2020, were as follows:

 

 

 

As of

March 31, 2021

 

 

As of December 31, 2020

 

Maturity of lease liabilities

 

 

 

 

 

 

 

 

2021

 

$

1,143

 

 

$

1,516

 

2022

 

 

1,562