logc-10q_20210630.htm
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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 June 30, 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)

 

65 Hayden Avenue, 2nd Floor, Lexington, MA

(Address of principal executive offices)

 

(I.R.S. Employer

Identification No.)

02421

(Zip code)

 

(617) 245-0399

(Registrant’s telephone number, including area code)

 

n/a

(Former name, former address and formal fiscal year, if changed since last report)

 

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

 

The 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 July 30, 2021, the registrant had 32,240,235 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

 

Table of Contents

 

 

Page  

PART I.

FINANCIAL INFORMATION

5

Item 1.

Financial Statements (Unaudited)

5

 

Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020

5

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020

6

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2021 and 2020

7

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020

8

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020

9

 

Notes to Unaudited Condensed Consolidated Financial Statements

10

Item 2.

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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

Item 4.

Controls and Procedures

30

 

 

 

PART II.        

OTHER INFORMATION

32

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 6.

Exhibits

33

Signatures

34

 

 

2


 

 

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 “anticipate,” “approach,” “believe,” “continue,” “could,” “designed,” “estimate,” “expect,”  “goal,” “intend,” “may,” “plan,” “potential,” “project,” “strategy,” “will,” “would” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements include statements concerning the following:

 

the design, cost, timing, progress and results of our current and future research and development activities, including statements with respect to our Phase 1/2 SUNRISE clinical trial and other development activities for our product candidate, LB-001, in methylmalonic acidemia, or MMA;  

 

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

 

the direct or indirect impacts of the COVID-19 pandemic on our business, operations and the markets and communities in which we and our partners, collaborators and vendors operate;

 

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 our collaboration and license agreements and our ability to enter into future collaboration and licensing 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 obtaining and maintaining patents, the duration of our patent protection and trade secret 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.

Any or all of these forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. These forward-looking statements involve risks and uncertainties, including those that are discussed 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, that could cause our actual results, financial condition, performance or achievements to be materially different from those indicated in these forward-looking statements. 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 advance and complete our Phase 1/2 SUNRISE 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. In addition we are subject to the following risks: existing preclinical data may not be predictive of the results of ongoing or later clinical trials; clinical trials may not be successful or may be discontinued or delayed for any reason; manufacturing and process development risks, including delays relating to continuously improving our manufacturing processes; risks associated with management and key personnel changes and transitional periods; the actual funding required to develop and commercialize product candidates, including for safety, tolerability, enrollment, manufacturing or economic reasons; the timing and content of decisions made by regulatory authorities; the actual time it takes to initiate and complete preclinical and clinical studies; the competitive landscape; changes in our economic and financial conditions; and our ability to obtain, maintain and enforce patent and other intellectual property protection for LB-001 and any other product candidates. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason. Unless otherwise stated, our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

In this Quarterly Report on Form 10-Q, 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.

LOGICBIO™, GENERIDE™, SAAVY™ and any associated logos are trademarks of LogicBio and/or its affiliates. All other trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective

3


 

owners. Any website addresses given in this Quarterly Report on Form 10-Q are for information only and are not intended to be an active link or to incorporate any website information into this document.

 

4


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

LogicBio Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

 

 

June 30, 2021

 

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

68,108

 

 

$

70,075

 

Accounts receivable

 

 

77

 

 

 

263

 

Prepaid expenses and other current assets

 

 

1,839

 

 

 

2,205

 

Total current assets

 

 

70,024

 

 

 

72,543

 

Property and equipment, net

 

 

2,103

 

 

 

1,815

 

Restricted cash

 

 

622

 

 

 

622

 

Operating lease right-of-use asset

 

 

5,126

 

 

 

5,660

 

TOTAL ASSETS

 

$

77,875

 

 

$

80,640

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,256

 

 

$

447

 

Accrued expenses and other current liabilities

 

 

3,613

 

 

 

2,701

 

Operating lease liabilities

 

 

1,159

 

 

 

1,094

 

Current portion of long-term debt

 

 

3,288

 

 

 

1,910

 

Current portion of deferred revenue

 

 

4,843

 

 

 

 

Total current liabilities

 

 

14,159

 

 

 

6,152

 

Long-term debt, net of issuance costs and discount

 

 

6,568

 

 

 

8,109

 

Operating lease liabilities, net of current portion

 

 

4,361

 

 

 

4,952

 

Deferred revenue, net of current portion

 

 

7,967

 

 

 

 

Total liabilities

 

 

33,055

 

 

 

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 June 30, 2021 and December 31, 2020.

 

 

 

 

 

 

Common stock, par value of $0.0001 per share; 175,000,000 shares authorized; 32,222,366 and 31,775,748 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

165,589

 

 

 

161,415

 

Accumulated other comprehensive income

 

 

 

 

 

 

Accumulated deficit

 

 

(120,772

)

 

 

(99,991

)

Total stockholders’ equity

 

 

44,820

 

 

 

61,427

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

77,875

 

 

$

80,640

 

 

See notes to unaudited condensed consolidated financial statements.

 

5


 

 

LogicBio Therapeutics, Inc.

Consolidated Statements of Operations

(In thousands, except share and per share data)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration and service revenue

 

$

802

 

 

$

965

 

 

$

1,263

 

 

$

1,986

 

Total revenue

 

 

802

 

 

 

965

 

 

 

1,263

 

 

 

1,986

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

7,257

 

 

 

5,895

 

 

 

13,676

 

 

 

13,068

 

General and administrative

 

 

3,765

 

 

 

3,029

 

 

 

7,824

 

 

 

6,221

 

Total operating expenses

 

 

11,022

 

 

 

8,924

 

 

 

21,500

 

 

 

19,289

 

LOSS FROM OPERATIONS

 

 

(10,220

)

 

 

(7,959

)

 

 

(20,237

)

 

 

(17,303

)

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

4

 

 

 

10

 

 

 

10

 

 

 

177

 

Interest expense

 

 

(283

)

 

 

(273

)

 

 

(554

)

 

 

(545

)

Other expense, net

 

 

 

 

 

(5

)

 

 

 

 

 

(11

)

Total other expense, net

 

 

(279

)

 

 

(268

)

 

 

(544

)

 

 

(379

)

Loss before income taxes

 

 

(10,499

)

 

 

(8,227

)

 

 

(20,781

)

 

 

(17,682

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(10,499

)

 

$

(8,227

)

 

$

(20,781

)

 

$

(17,682

)

Net loss per share—basic and diluted

 

$

(0.33

)

 

$

(0.35

)

 

$

(0.65

)

 

$

(0.76

)

Weighted-average common stock outstanding—basic and diluted

 

 

32,162,375

 

 

 

23,326,018

 

 

 

32,048,716

 

 

 

23,250,910

 

 

See notes to unaudited condensed consolidated financial statements.

 

6


 

 

LogicBio Therapeutics, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(10,499

)

 

$

(8,227

)

 

$

(20,781

)

 

$

(17,682

)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investments

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

$

(10,499

)

 

$

(8,227

)

 

$

(20,781

)

 

$

(17,682

)

 

See notes to unaudited condensed consolidated financial statements.

 

7


 

 

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

 

Vesting of restricted stock

 

 

18,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock related to at-the-market offerings, net of issuance costs of $33

 

 

269,540

 

 

 

 

 

 

1,907

 

 

 

 

 

 

 

 

 

1,907

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

769

 

 

 

 

 

 

 

 

 

769

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,227

)

 

 

(8,227

)

BALANCE, June 30, 2020

 

 

23,504,843

 

 

$

3

 

 

$

113,205

 

 

$

-

 

 

$

(85,052

)

 

$

28,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Vesting of restricted stock

 

 

84,384

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options

 

 

70,620

 

 

 

 

 

 

52

 

 

 

 

 

 

 

 

 

52

 

Issuance of common stock related to at-the-market offerings, net of issuance costs of $1

 

 

9,156

 

 

 

 

 

 

45

 

 

 

 

 

 

 

 

 

45

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

997

 

 

 

 

 

 

 

 

 

997

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,499

)

 

 

(10,499

)

BALANCE, June 30, 2021

 

 

32,222,366

 

 

$

3

 

 

$

165,589

 

 

$

-

 

 

$

(120,772

)

 

$

44,820

 

 

See notes to unaudited condensed consolidated financial statements.

 

8


 

 

LogicBio Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(20,781

)

 

$

(17,682

)

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

 

 

 

 

 

 

 

 

Depreciation expense

 

 

286

 

 

 

226

 

Net amortization of premiums and discounts on investments

 

 

 

 

 

26

 

Stock-based compensation expense

 

 

1,986

 

 

 

1,574

 

Non-cash interest expense

 

 

114

 

 

 

103

 

Non-cash lease expense

 

 

542

 

 

 

1,025

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

366

 

 

 

96

 

Accounts receivable

 

 

186

 

 

 

 

Accounts payable

 

 

502

 

 

 

(113

)

Accrued expenses and other current liabilities

 

 

463

 

 

 

(1,201

)

Deferred revenue

 

 

12,810

 

 

 

101

 

Net cash used in operating activities

 

 

(3,526

)

 

 

(15,845

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Maturities of investments

 

 

 

 

 

17,500

 

Purchase of property and equipment

 

 

(352

)

 

 

(202

)

Net cash (used in) provided by investing activities

 

 

(352

)

 

 

17,298

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

52

 

 

 

84

 

Net proceeds from at-the-market common stock issuances

 

 

2,136

 

 

 

1,907

 

Principal repayments on term loan

 

 

(277

)

 

 

 

Net cash provided by financing activities

 

 

1,911

 

 

 

1,991

 

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

   CASH

 

 

(1,967

)

 

 

3,444

 

Cash, cash equivalents and restricted cash at beginning of year

 

 

70,697

 

 

 

33,875

 

Cash, cash equivalents and restricted cash at end of period

 

$

68,730

 

 

$

37,319

 

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED

   CASH

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

68,108

 

 

$

36,697

 

Long-term restricted cash

 

 

622

 

 

 

622

 

Total cash, cash equivalents and restricted cash

 

$

68,730

 

 

$

37,319

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

440

 

 

$

442

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

 

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for operating lease obligation

 

$

 

 

$

6,428

 

Property and equipment purchases in accrued expenses and accounts payable

 

$

340

 

 

$

116

 

 

See notes to unaudited condensed consolidated financial statements.

 

9


 

 

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 clinical-stage genetic medicine company pioneering gene editing and gene delivery platforms to address rare and serious diseases from infancy through adulthood. The Company's gene editing platform, GeneRide™, is a new approach to precise gene insertion harnessing a cell's natural deoxyribonucleic acid (“DNA”) repair process potentially leading to durable therapeutic protein expression levels. The Company's gene delivery platform, sAAVy™, is an adeno-associated virus (“AAV”) capsid engineering platform designed to optimize gene delivery for treatments in a broad range of indications and tissues.

Based on the Company’s GeneRide technology, LogicBio is developing its lead product candidate, LB-001, to treat methylmalonic acidemia (“MMA”) in pediatric patients. On June 2, 2021, the Company announced that the first patient was dosed with LB-001 in its SUNRISE clinical trial. 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. The Company expects seven centers in the United States and one center in Saudi Arabia to participate in the SUNRISE trial.

In April 2021, the Company entered into an Exclusive Research Collaboration, License and Option Agreement with CANbridge Care Pharma Hong Kong Limited (“CANbridge”), pursuant to which LogicBio granted CANbridge (a) an exclusive worldwide license to certain of the Company’s intellectual property rights, including those relating to AAV sL65 (“sL65”), the first capsid produced from the sAAVy platform, to develop, manufacture and commercialize gene therapy candidates for the treatment of Fabry and Pompe diseases, (b) an option to obtain an exclusive worldwide license to certain of the Company’s intellectual property rights, including those relating to sL65, to develop and commercialize gene therapy candidates for the treatment of two additional indications, and (c) an exclusive option to obtain an exclusive license to develop and commercialize LB-001 for the treatment of MMA in China, Taiwan, Hong Kong and Macau. Also in April 2021, the Company announced a research collaboration with Daiichi Sankyo Company, Limited (“Daiichi”) for the development of treatments for two indications based on GeneRide. In addition, the Company entered into a research collaboration with Takeda Pharmaceutical Company Limited (“Takeda”) in January 2020 to develop LB-301, an investigational therapy leveraging GeneRide, for the treatment of Crigler-Najjar syndrome (“CN”), a rare pediatric disease.  

Since its inception, the Company has devoted the majority of its efforts to research and development, including its preclinical and clinical development activities and its manufacturing and process development activities, raising capital, and providing general and administrative support for these operations. 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 product candidates, successfully commercialize its products, if approved, 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. The Company is following federal, state and local requirements and guidelines with respect to the COVID-19 pandemic, and has allowed its employees to return to working on-premises in accordance with those requirements and guidelines.

The COVID-19 pandemic did not have a material impact on the Company’s results of operations, cash flow and financial position as of and for the six months ended June 30, 2021. However, the Company is aware that certain of its third party vendors are being affected by import/export and other restrictions due to COVID-19, which are currently having an impact on certain of the Company’s research, development and manufacturing activities. 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.

10


 

Liquidity and Capital Resources

The Company has had recurring losses since inception and incurred a loss of $20,781 during the six months ended June 30, 2021. Net cash used in operations for the six months ended June 30, 2021 was $3,526. The Company expects to continue to generate operating losses and use cash in operations for the foreseeable future. As of June 30, 2021, the Company had cash and cash equivalents of $68,108. The Company believes that its cash and cash equivalents at June 30, 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, including its preclinical and clinical development activities and its manufacturing and process development activities, and ongoing operating expenses. Management’s plans to address these requirements include financing future cash needs through equity or debt financings, payments from its collaborators, strategic transactions, or a combination of those approaches. These plans may also include the possible deferral of certain operating expenses unless and until additional capital is received. There can be no assurance that 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. 

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 U.S. 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 June 30, 2021, consolidated results of operations for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020. Such adjustments are of a normal and recurring nature. The results of operations for the three and six months ended June 30, 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.

Recently Issued Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“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 Accounting Standards Update (“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.

 

11


 

 

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

 

June 30, 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

 

$

67,569

 

 

$

67,569

 

 

$

 

 

$

 

Total financial assets

 

$

67,569

 

 

$

67,569

 

 

$

 

 

$

 

 

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 six months ended June 30, 2021.

4. INVESTMENTS

As of June 30, 2021 and December 31, 2020, the Company did not hold any short-term or long-term investments.

5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities at June 30, 2021 and December 31, 2020 consisted of the following:

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Accrued compensation and benefits

 

$

1,208

 

 

$

1,200

 

Accrued professional services

 

 

914

 

 

 

988

 

Accrued lab supplies

 

 

219

 

 

 

71

 

Accrued IP licens