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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

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

For the fiscal year ended December 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 Number)

 

 

 

 

65 Hayden Avenue, 2nd Floor, Lexington, MA

(Address of principal executive offices)

 

02421

(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

 

Name of Each Exchange on Which Registered

Common Stock, par value $0.0001 per share

 

LOGC

 

The Nasdaq Global Market

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes      No  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act.    Yes      No  

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 the 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. (Check one):

 

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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

The aggregate market value of the voting common stock held by non-affiliates of the registrant was approximately $100.8 million based on the last reported sale price of the registrant’s common stock on The Nasdaq Global Market on June 30, 2021. The registrant has no non-voting common stock.

As of February 25, 2022, there were 32,962,733 shares of registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for its 2022 Annual Meeting of Stockholders, which the registrant intends to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year ended December 31, 2021, are incorporated by reference into Part III of this Annual Report on Form 10-K.

 

 

 


 

 

 

TABLE OF CONTENTS

 

 

 

Page

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

ii

 

Risks Factors Summary

1

 

PART I

3

Item 1.

Business

3

Item 1A.

Risk Factors

34

Item 1B.

Unresolved Staff Comments

88

Item 2.

Properties

88

Item 3.

Legal Proceedings

88

Item 4.

Mine Safety Disclosures

89

 

 

 

 

PART II

90

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuers Purchases of Equity Securities

90

Item 6.

[Reserved]

90

Item 7.

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

91

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

102

Item 8.

Financial Statements and Supplementary Data

102

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

102

Item 9A.

Controls and Procedures

102

Item 9B.

Other Information

103

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

103

 

 

 

 

PART III

104

Item 10.

Directors, Executive Officers and Corporate Governance

104

Item 11.

Executive Compensation

104

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

104

Item 13.

Certain Relationships and Related Transactions, and Director Independence

104

Item 14.

Principal Accountant Fees and Services

104

 

 

 

 

PART IV

105

Item 15.

Exhibits and Financial Statement Schedules

105

Item 16.

Form 10-K Summary

108

 

 

i


 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of this Annual Report on Form 10-K. 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,” “projection,” “strategy,” “will,” “would,” “should,” “seek,” “likely,” “become,” “develop,” “engage,” “execute,” “expand,” “leverage,” “future” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements may include statements concerning the following:

 

the design, cost, initiation, 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;  

 

early clinical results and the significance and interpretation thereof and the expected timing of announcing additional interim clinical data in the SUNRISE trial;

 

potential attributes and benefits of our GeneRide™ and sAAVy platforms and our existing or future product candidates, including any potential benefit of such platforms over competing platforms;

 

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;

 

our ability to optimize certain components of our viral vector manufacturing process, including production yields, drug product purity, decreasing “empty” capsids and developing reliable characterization methods;

 

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 obtain the funding for our operations necessary to continue the advancement of any 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 Annual Report on Form 10-K may turn out to be inaccurate. These forward-looking statements involve risks and uncertainties, including those that are discussed below under the heading “Risk Factors Summary”, and the risk factors identified further in Part I, Item 1A. "Risk Factors" included in this Annual Report on Form 10-K and elsewhere in this Annual Report on Form 10-K, 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, our ability to successfully resolve the current clinical hold on our IND of LB-001, the impact of the ongoing COVID-19 pandemic on our ability to progress with our research, development, manufacturing and regulatory efforts, 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 safety concerns that the U.S. Food and Drug Administration, or FDA, and other regulatory bodies may continue to have, 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-

ii


 

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 Annual Report on Form 10-K. 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 Annual Report on Form 10-K, unless the context otherwise requires, the terms “LogicBio,” “LogicBio Therapeutics, Inc.,” the “Company,” “we,” “us,” “our” and similar references in this Annual Report on Form 10-K 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 Annual Report on Form 10-K are the property of their respective owners. The use or display of other parties’ trademarks, trade dress or products in this Annual Report on Form 10-K does not imply that we have a relationship with, or endorsement or sponsorship of, the trademark or trade dress owners. Any website addresses given in this Annual Report on Form 10-K are for information only and are not intended to be an active link or to incorporate any website information into this document.

 

iii


 

 

RISK FACTORS SUMMARY

The following is a summary of the principal risks that could adversely affect our business, financial condition and results of operations:

 

Risks Related to Our Financial Position and Need for Additional Capital

 

We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future. We may never achieve or maintain profitability.

 

Under our ASC 205-40 analysis, there is “substantial doubt” that we will have sufficient funds to satisfy our obligations through the next twelve months from the date of issuance of this Annual Report on Form 10-K.

 

We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of any product candidates.

Risks Related to Discovery, Development, Clinical Testing, Manufacturing and Regulatory Approval

 

Our business may be materially adversely affected if the clinical hold placed by the FDA on the LB-001 IND is not timely and favorably resolved or if such regulatory concerns lead to more burdensome preclinical studies or clinical trials that cause significant delays in or end development of LB-001.

 

Our product candidates may cause serious adverse events or undesirable side effects or have other properties that may delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following marketing approval, if any.

 

We intend to identify and develop product candidates based on our novel GeneRide and sAAVy technology platforms, which makes it difficult to predict the time and cost of product candidate development.

 

Because gene delivery is novel and the regulatory landscape that governs any product candidates we may develop is uncertain and may change, we cannot predict the time and cost of obtaining regulatory approval, if we receive it at all, for any product candidates we may develop.

 

Clinical trials are expensive, time-consuming, difficult to design and implement and involve an uncertain outcome.

 

If we encounter difficulties enrolling patients in our clinical trials, particularly in light of the COVID-19 pandemic, our clinical development activities could be delayed or otherwise adversely affected.

 

Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize a product candidate we may develop, and any such approval may be for a more narrow indication than we seek.

 

We may not be successful in our efforts to identify additional product candidates.

 

The regulatory approval processes of the FDA, the EMA and other regulatory authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.

 

We are heavily dependent on the success of LB-001 and if LB-001 does not receive regulatory approval in the United States or other jurisdictions, or is not successfully commercialized, our business will be harmed.

 

Interim “top-line” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

Risks Related to Our Dependence on Third Parties

 

Reliance on third-party manufacturers increases the risk that we will not have sufficient quantities of testing materials, product candidates or any medicines that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost.

 

If the third parties that conduct, supervise and monitor our clinical trials do not successfully carry out their contractual duties, or if they perform in an unsatisfactory manner, it may harm our business.

 

Collaborations we enter into with third parties for the research, development and commercialization of certain of our product candidates may not be successful, we may not be able to capitalize on the market potential of those product candidates.

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Our collaborators or strategic partners may decide to adopt alternative technologies or may be unable to develop commercially viable products with our technology, which would negatively impact our revenues and our strategy to develop these products.

 

If we fail to comply with obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

Risks Related to Our Intellectual Property

 

If we are unable to obtain and maintain sufficient patent protection for any product candidates and for our technology, our competitors could develop and commercialize products and technology similar or identical to ours.

 

If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

 

Patent terms and market exclusivity for our product candidates may be inadequate to protect our competitive position for an adequate amount of time.

 

The intellectual property landscape around genetic medicines is highly dynamic, and third parties may initiate legal proceedings alleging that we are infringing, misappropriating, or otherwise violating their intellectual property rights, the outcome of which would be uncertain.

 

We may be subject to claims challenging the inventorship of our patents and other intellectual property.

Risks Related to Healthcare Laws and Other Legal Compliance Matters

 

Our current and future business operations are and will be subject to applicable healthcare regulatory laws, which could expose us to penalties and other sanctions.

 

We are subject to stringent privacy laws, information security laws, regulations, policies and contractual obligations related to data privacy and security and changes in such laws, regulations, policies and contractual obligations could adversely affect our business.

Risks Related to Employee Matters and Managing Growth

 

Our future success depends on our ability to retain our key personnel and to attract, retain and motivate qualified personnel.

 

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PART I

Item 1.Business.

 

Overview

 

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

 

Our lead product candidate, LB-001, is a single-administration, genome editing therapy developed using our GeneRide technology, currently in Phase 1/2 development for the treatment of methylmalonic acidemia, or MMA, in pediatric patients. MMA is a rare and life-threatening genetic disorder affecting approximately 1 in 50,000 newborns in the United States that often results in developmental delays and other long-term complications and a high rate of hospitalizations. In April 2021, we granted CANbridge Care Pharma Hong Kong Limited, or CANbridge, an exclusive option to obtain an exclusive license to develop and commercialize LB-001 for the treatment of MMA in China, Taiwan, Hong Kong and Macau, or Greater China. In February 2022, we announced that the FDA notified us that our Investigational New Drug application, or IND, of LB-001 has been placed on clinical hold.

 

In December 2021, we announced the nomination of a new product candidate, LB-401, based on our GeneRide technology. LB-401 is a genome editing therapy being developed for the treatment of hereditary tyrosinemia type 1, or HT1. HT1 is a rare, genetic disorder characterized by elevated blood levels of the amino acid tyrosine, a building block of most proteins, and affects 1 in 100,000 to 120,000 newborns worldwide.

 

Also based on our GeneRide technology, we completed the first phase of preclinical development of our product candidate, LB-301, for the treatment of Crigler-Najjar syndrome, or CN, a rare pediatric disease affecting approximately 1 in 1,000,000 newborns globally, in collaboration with Takeda Pharmaceutical Company Limited, or Takeda. In addition, we are developing treatments based on our GeneRide technology for two indications in collaboration with Daiichi Sankyo Company, or Daiichi. We have also demonstrated proof of concept of our GeneRide platform in hemophilia B and alpha-1-antitrypsin deficiency, or A1ATD, animal disease models, and more recently, in Wilson disease.

 

Based on our sAAVy technology, we are developing gene therapy candidates utilizing, among other things, sL65, the first capsid produced from sAAVy, for the treatment of Fabry and Pompe diseases in collaboration with CANbridge. We also granted CANbridge an option to obtain an exclusive worldwide license to certain of our intellectual property rights, including those relating to sL65, to develop and commercialize gene therapy candidates for the treatment of two additional indications.

 

We expect to select future product candidates for diseases addressed by targeting the liver initially, and later by targeting other tissues such as the central nervous system, or CNS, muscle, or other tissues.

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Our Pipeline

 

We have built a pipeline to further our mission of delivering the hope of genetic medicine to people impacted by devastating diseases.  Our pipeline is derived from our GeneRide and sAAVy platforms.

 

Figure 1. Our Pipeline.

 

Strategy

 

Our goal is to establish ourselves as the leading integrated genetic medicine company focused on developing and commercializing genome editing and gene therapy treatments based on our GeneRide and sAAVy platforms. Key elements of our strategy are as follows:

 

 

Advance our lead product candidate, LB-001, through successful clinical trials and ultimately into commercialization. LB-001 is a single-administration, genome editing therapy developed using our GeneRide technology, currently in Phase 1/2 development for the treatment of MMA in pediatric patients. We chose MMA as our first indication to enter clinical trials due to the high unmet medical need and the absence of therapeutic treatments for this disease. We have retained worldwide development and commercialization rights to LB-001 with the exception of Greater China, for which we granted CANbridge an exclusive option to obtain an exclusive license to develop and commercialize LB-001.

 

 

 

Pursue a development strategy to rapidly advance LB-401, our product candidate for HT1, into clinical trials. We are developing LB-401, our genome editing therapy developed using our GeneRide technology, for the treatment of HT1. In preclinical studies presented at the 2021 European Society of Gene and Cell Therapy, or ESGCT, Annual Meeting in October 2021, HT1 models with acute liver damage showed that GeneRide-edited hepatocytes repopulated the entire liver within four weeks post-administration, replacing the diseased hepatocytes with corrected hepatocytes. HT1 mice that received the GeneRide-FAH vector were no longer reliant on the current standard of care for the disease, and demonstrated restored normal body growth, liver function, and undetectable succinyl acetone levels.

 

 

 

Apply our platform capabilities to broaden our pipeline by pursuing additional indications addressed by targeting the liver initially and later by targeting other tissues. We have established preclinical proof of concept in several indications that can be targeted through the liver using GeneRide, including MMA, HT1, Wilson disease,

 

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CN, Hemophilia B and A1ATD. In addition, our investment in developing sAAVy has yielded an initial set of capsids, including sL65, with enhanced liver tropism, functional transduction, and improved manufacturability, providing us with potentially differentiated delivery of our product candidates. We plan to continue our research to explore additional potential indications leveraging our modular approach, learnings from our lead programs and our strengths in genome editing and gene therapy.

 

 

 

Collaborate to realize the full potential of our platforms. We are currently developing treatments based on our GeneRide technology for two indications in collaboration with Daiichi. Based on our sAAVy technology, we are developing gene therapy candidates utilizing, among other things, sL65, for the treatment of Fabry and Pompe diseases in collaboration with CANbridge. In 2021, we completed the first phase of preclinical development of our product candidate, LB-301, for the treatment of CN in collaboration with Takeda. We also intend to seek additional collaborations to accelerate the development of our GeneRide and sAAVy platforms into genome editing and gene therapy products beyond those we plan to develop internally.

 

 

 

Leverage our experienced team to maximize the potential of our platforms. Delivering on the promise of our GeneRide and sAAVy technologies requires an exceptional organization. We have assembled a group of leaders and scientific talent in the fields of rare diseases, genome editing, gene therapy and process and analytical development to execute on our plans to develop and commercialize genetic medicines. We plan to apply our research and development expertise to enhance our platforms and expand our intellectual property portfolio.

 

 

Genetic Diseases and Their Treatment

 

Genetic diseases are caused by abnormalities in a person’s DNA that are either inherited or acquired early in embryonic development. We are currently focused on a subset of genetic diseases, known as monogenic diseases, which are caused by genetic abnormality in a single gene. There are believed to be over 6,500 monogenic diseases. Monogenic diseases have been of particular interest for biomedical innovators due to the perceived simplicity of their disease pathology; however, the vast majority of these diseases and disorders remain unaddressed. This is beginning to change largely due to innovation in two fields: gene editing and gene therapy. Both fields have experienced certain challenges that we believe we have the potential to address with therapies from our GeneRide and sAAVy platforms.

 

Overview of Gene Editing

 

Many gene editing approaches work by disrupting, inserting, or modifying genes in the natural context of the genome. The vast majority of existing gene editing methods rely on a class of enzymes, called nucleases, to make a double-stranded break in the DNA at a targeted location. These enzymes include CRISPR, Zinc Fingers and TAL Nucleases, and, while these approaches have distinct technical features, they make the same type of edit and, therefore, share several similar limitations.

 

First, there is a lack of predictability in genetic outcomes when altering gene sequences with nucleases. The dominant, naturally-occurring DNA repair system that corrects double-stranded breaks within cells is called Non-Homologous End Joining, or NHEJ. This system can patch the broken ends of the chromosomes back together but can simultaneously insert or delete sequences at random near the location where the break occurs. While this NHEJ approach is effective if the desired outcome is to knock out or switch off the whole gene, it does not allow for precise control of the specific genetic outcome at the target site.

 

Second, there are potential toxicities associated with double-stranded breaks, such as cell death response and genomic instability. In addition, if the double-stranded break occurs in the wrong place, the break can also lead to unwanted gene disruptions. Multiple edits, and thus multiple double-stranded breaks, can compound this issue and lead to large-scale genomic translocations and rearrangements, potentially limiting the applicability of nuclease-based approaches in multiplex editing.

 

Third, while gene disruption with nucleases is highly efficient, making specific sequence changes to correct or modify genes remains largely inefficient. To change a gene sequence, gene editing using nucleases may use a DNA repair pathway called Homology Directed Repair, or HDR. HDR is a low-efficiency DNA repair mechanism, typically yielding single digit percentage editing. This mechanism also requires a DNA template containing the desired, corrected gene to drive the gene editing. The template may be an endogenous sequence or, more frequently, is an exogenously delivered DNA template, increasing the complexity of the therapy. More recently, approaches have been developed to insert sequences into certain highly expressed genes, such as the albumin locus in liver cells. These approaches rely on the strength of the selected promoter to overcome the initial low level of integration.

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Overview of Gene Therapy

 

Gene therapy involves the use of viral vectors, including AAV, or retroviruses, such as lentiviruses, to deliver new copies of genes, or transgenes, to cells. In the case of traditional AAV gene therapy, it is unknown whether life-long AAV expression has been achieved in several organs. Any lack of persistence can be further exacerbated when treating children, since the transgene becomes diluted as the child grows and cells are rapidly dividing. In addition, preexisting immunity may limit use in some patients altogether and certain immune responses may prevent redosing in the context of lack of persistence.

 

Retroviral vectors, including lentiviral vectors, work by inserting a gene payload into the patient’s chromosome, typically ex vivo, and have demonstrated improved durability compared to AAV therapies. However, these vectors bear the risk of random genomic integration, which creates the potential of disrupting important genes or activating cancer-causing genes.

 

Our GeneRide Technology Platform

 

Our proprietary genome editing platform, GeneRide, is a new approach to gene editing that uses an AAV vector to deliver a gene into the nucleus of the cell and then uses a form of HDR called homologous recombination, or HR, with the goal of stably integrating the corrective gene into the genome of the recipient at a location where it is regulated by an endogenous promoter. We believe this approach will lead to life-long protein production, even as the body grows and changes over time. This gives GeneRide the potential to overcome some of the key limitations of both certain other gene editing and traditional gene therapy approaches to treat genetic diseases, particularly in pediatric patients. We describe our approach as “genome editing” because it uses HR to deliver the corrective gene to one specific location in the genome.

 

Our GeneRide technology uses a synthetic viral vector to deliver a transgene to the nuclei of the patient’s cells in a precise manner via an infusion. Upon sensing the therapeutic DNA in the nucleus, the cell’s natural DNA repair process is expected to activate and integrate the transgene at a specific site in the patient’s genome.

 

When our therapeutic transgene is integrated at the targeted locus, it is designed to leverage the strength of this endogenous promoter to drive expression of the transgene, without disrupting the target gene’s production. Shortly after treatment, the modified cells can begin producing therapeutic levels of protein to combat the disease.

 

The illustration below shows how a GeneRide construct inserts a transgene at a specific point next to a highly expressed gene using HR:

 

 

 

Figure 2. Schematic of the GeneRide construct before integration (AAV delivery) and following HR-mediated integration into the genome at the targeted highly expressed gene (HEG) locus.

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The GeneRide technology consists of three fundamental components, each of which contributes to the potential benefits of the GeneRide approach:

 

 

Homology guides comprised of hundreds of nucleotides. Our flanking sequences, known as homology guides or arms, are designed to direct site-specific integration and limit potential off-target insertion of our construct. Each arm is 500-1500 nucleotides long, in contrast to guide sequences used in CRISPR/Cas9, which are only dozens of base pairs long, and we believe this increased length improves both precision and site-specific integration. GeneRide’s homology guides direct the integration of the transgene without the need of exogenous promoters.

 

 

 

Transgene. We choose corrective genes, known as transgenes, to integrate into the host cell’s genome. These transgenes are the functional versions of the disease-associated genes found in a patient’s cells. We optimize the combined size of the transgenes and the homology arms to increase the likelihood that these transgenes will ultimately be delivered appropriately in the patient.

 

 

 

2A peptide for polycistronic expression. We include a short sequence coding for a 2A peptide, which plays a couple of important roles. First, the 2A peptide facilitates polycistronic expression, which is the production of two distinct proteins from the same mRNA. This, in turn, allows us to integrate our transgene in a non-disruptive way by coupling transcription of our transgene to a highly expressed target gene in the tissue of interest, driven by a strong endogenous promoter. Second, the patient’s targeted gene is produced normally, except for the addition of a C-terminal tag that serves as a circulating biomarker to indicate successful site-specific integration and expression of the transgene. We believe that this modification to the genome will have minimal effect on its function.

 

 

Potential advantages of our GeneRide approach include the following:

 

 

Targeted integration of transgene into the genome. Conventional gene therapy approaches deliver therapeutic transgenes to target cells. The genes are not expected to integrate into the host cell’s chromosomes and are vulnerable to dilution caused by the natural processes that lead to replication and segregation of DNA during cell division. This is particularly problematic when conventional gene therapies are introduced early in the patient’s life because the rapid growth of tissues during the child’s normal development will result in dilution and eventual loss of the therapeutic benefit associated with the transgene. Non-integrated genes expressed outside the genome on a separate strand of DNA are called episomes. Episomal expression is typically transient in target tissues such as the liver, in which there is high turnover of cells and which tends to grow considerably in size during the course of a pediatric patient’s life. With our GeneRide technology, the transgene is integrated into the genome, which has the potential to provide stable and durable transgene expression as the cells divide and the tissue of the patient grows, and may result in a durable therapeutic benefit.

 

 

 

Transgene expression without exogenous promoters. With our GeneRide technology, the transgene is expressed at a location where it is regulated by a potent endogenous promoter. Specifically, we use our long homology guides to insert the transgene at a precise site in the genome that is expressed under the control of a potent endogenous promoter. By not using exogenous promoters and integrating at the very end of a highly expressed gene, we can drive high levels of tissue-specific gene expression, without the possible detrimental issues associated with the use of exogenous promoters in case of off-target integration.

 

 

 

Nuclease-free genome editing. By harnessing the naturally occurring process of HR, GeneRide is designed to avoid undesired side effects associated with exogenous nucleases used in conventional gene editing technologies. The use of these engineered enzymes has been associated with genotoxicity, including chromosomal alterations, resulting from the error-prone DNA repair of double-stranded DNA cuts. Avoiding the use of nucleases also reduces the number of exogenous components needed to be delivered to the cell.

 

 

 

Modularity. We believe our modular approach has the potential to allow GeneRide to deliver robust, tissue-specific gene expression that will be adaptable across different therapeutics targeting the same tissue. The AAV capsid serves as the vehicle that enables delivery of the rest of the components to cells in the body. We and our research partners have done extensive work in developing vectors designed to be highly efficient in delivering their contents to specific target tissues such as the liver. We have also done extensive work developing various designs of homology guides, which direct the integration of the target gene to a precise location in the genome. We believe that our work on AAV capsids and homology guides gives us the potential to select optimal components in order to address different therapeutic indications with our GeneRide technology. We expect this approach will allow us to

 

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leverage common manufacturing processes and analytics across our GeneRide product candidates and could potentially shorten the development process of future programs.

 

 

 

Selective advantage. In MMA and other diseases like HT1 and Wilson disease, in our preclinical studies, we discovered a biologic phenomenon we call “selective advantage,” another key feature of the GeneRide technology. Selective advantage enables healthy edited hepatocytes carrying the corrective gene to survive and reproduce better than the endogenous mutated hepatocytes, and to ultimately repopulate a part or whole of the diseased liver. This is supported by our data from animal models where initial integration of the transgene into approximately 0.1 to 1% of cells resulted in therapeutic benefit over time. Use of strong endogenous promoters, such as the albumin promoter, appears to be helpful in overcoming the modest levels of integration to yield potentially therapeutic levels of transgene expression.

 

 

A key step in applying the GeneRide platform is to identify the target genetic locus for integration. This is important because the location will dictate regulation of transgene expression, specifically the levels and tissues where the protein will be produced.

 

For our liver-directed programs, including LB-001 and LB-401, which are described further below, we have selected the albumin locus as the site of integration. Albumin is only produced at meaningful levels in the liver, where it is the most highly expressed gene. Integration of the transgene downstream of a highly expressed tissue-specific gene, like albumin, is an important design feature of GeneRide. The following graphs show the expression of albumin relative to other genes in the liver, and the expression of albumin in the liver compared to other tissues with the highest expression of albumin.

 

Top 2,000 liver expressed genes

 

Figure 3. The most abundant genes expressed in the liver, ranked from highest (ALB) to number 2,000. Each circle represents an individual gene. TPM=transcripts per million.

 


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ALB gene expression across the 15 tissues with the highest ALB gene expression levels

 

Figure 4. The liver is the organ where nearly all albumin is expressed in the body. Liver-specific GeneRide

constructs targeting the ALB locus will predominantly be expressed in the liver.

 

Targeting the albumin locus for liver indications allows us to leverage the strong endogenous promoter that drives the high level of albumin production to maximize the expression of our transgene. We believe that linking the expression of our transgene to albumin will allow the expression of our transgene at therapeutic levels without requiring the addition of exogenous promoters or the integration of our transgene in a majority of target cells.

 

The following tables show the relative expression levels of albumin as compared to select disease-related genes in the liver, including methylmalonyl-CoA mutase, or MUT, the deficient gene in patients with MMA. The naming convention for the gene encoding methylmalonyl-CoA mutase recently changed from MUT to MMUT but we will maintain the previous convention for consistency.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 5. Albumin expression levels are at least 100x higher than other select liver genes associated with monogenic diseases. (PAH: phenylketonuria, F9: hemophilia B, MUT: MMA, UGT1A1: Crigler-Najjar syndrome).

 

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We have observed that GeneRide leads to integration of the corrective gene at the albumin locus in preclinical mouse models of disease, non-human primates, or NHPs, and human cells. We expect that our future liver-directed product candidates will also target the albumin locus for integration. This feature should make both on-target and off-target integration a more predictable process across programs. We are exploring the possibility of delivering our therapy to other tissues and target locations in the genome.

 

LB-001 for the Treatment of Methylmalonic Acidemia

 

Our lead product candidate, LB-001, is a single-administration, genome editing therapy developed using our GeneRide technology, currently in Phase 1/2 development for the treatment of MMA.

 

Methylmalonic Acidemia

 

MMA is a rare genetic disorder that is caused by mutations in several genes that encode enzymes responsible for the normal metabolism of certain amino acids. The most common mutations are in the gene for MUT, which cause complete or partial deficiencies in its activity. As a result, a substance called methylmalonic acid and other potentially toxic compounds can accumulate, causing the signs and symptoms of MMA.

 

The effects of MMA usually appear shortly after birth and can be severe and life-threatening, with symptoms including lethargy, vomiting, dehydration, acidosis and elevated ammonia levels and failure to thrive. Without treatment, MMA can lead to coma and death in infancy. Patients with MMA who survive the neonatal period or have later onset of disease are at high-risk of long-term complications including feeding problems, intellectual disability, kidney disease and pancreatitis.

 

There are currently no approved therapies for the underlying cause of MMA, and the outlook for MMA patients remains poor. The current standard of care for MMA is chronic management of the disease limited mainly to a low-protein, high-calorie diet, lacking amino acids normally processed by the MUT pathway. Despite dietary management and vigilant care, MMA patients, especially those with the most severe deficiencies in MUT, often suffer neurologic and kidney damage exacerbated during periods of catabolic stress when injury, infection or illness trigger the breakdown of protein in the body. Because of the poor outcomes associated with the current standard of care, combined liver-kidney transplantation, or early liver transplantation, has emerged as an intervention aimed at improving metabolic control. However, the finite number of liver donors, significant risks associated with surgery, high procedural costs (in the United States, approximately $880,000 on average for liver transplantation and $1.3 million on average for combined liver and kidney transplantation) and lifetime dependence on immunosuppressive drugs limit the widespread implementation of liver transplantation in patients with MMA.

 

Life expectancy for patients with MMA has increased over the past few decades but is still estimated to be limited to approximately 20 to 30 years. Quality of life for both patients and their families and caregivers is significantly impacted by the disease due to the constraints it places on school life and social functioning. Early intervention in this vulnerable population is essential to combat the manifestation of irreversible clinical disease pathologies.

 

The incidence of MMA in the United States is reported to be 1 in 50,000 births, with a current U.S. prevalence of approximately 1,600 to 2,400 patients. The proportion of MMA patients with the MUT mutation, the genetic deficiency targeted by LB-001, is estimated at approximately 63% of the total MMA population. We estimate the number of MMA patients with the MUT mutations to be 3,400 to 5,100 patients in key global markets, of which 1,000 to 1,500 patients are in the United States. Because of the need for early intervention, newborns are screened for MMA in every state in the United States.

 

LB-001

 

LB-001 is designed to introduce a functional copy of the MUT gene into the genome of MMA patients. LB-001 consists of a DNA construct, which includes a gene encoding the human MUT enzyme encapsulated in an AAV capsid. The MUT enzyme coding sequence is coupled to the 2A peptide sequence and surrounded by homology guides that drive the integration of the MUT gene and the 2A peptide sequence into the chromosomal locus for the albumin gene. Based on the way our construct integrates into the albumin locus, the MUT gene is then expressed resulting in synthesis of MUT enzyme as a separate protein from albumin. We chose LK03, the AAV capsid we use in LB-001, because it has been optimized to target human liver cells and had demonstrated strong liver-targeting in human clinical trials.

 

 

LB-001 Clinical Development Program

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We are evaluating the safety, tolerability and preliminary efficacy of LB-001 in our Phase 1/2 SUNRISE clinical trial in pediatric patients with MMA. The SUNRISE trial is designed to enroll up to eight patients with ages ranging from six months to twelve years and evaluate a single administration of LB-001 at two dose levels (5 x 1013 vg/kg and 1 x 1014 vg/kg). The primary endpoint of the SUNRISE trial is to assess the safety and tolerability of LB-001 at 52 weeks after a single infusion. Additional endpoints include changes in disease-related biomarkers, including serum methylmalonic acid, clinical outcomes such as growth and healthcare utilization, and the pharmacodynamic marker albumin-2A. Subject to the resolution of the clinical hold, we expect to enroll patients in up to seven centers in the United States and up to one center in Saudi Arabia.

 

In June 2021, we announced that the first patient was dosed in the SUNRISE trial. In accordance with the FDA-reviewed protocol, we initially enrolled patients in the three- to twelve-year-old age group at the lower dose. Mid-October 2021, we announced early results from the SUNRISE trial. The early results showed measurable levels of albumin-2A, the technology-related biomarker indicating site-specific gene insertion and protein expression. Detection of albumin-2A is an indication that we have achieved the first ever in vivo genome editing in children. We also announced in mid-October 2021 that, following an evaluation of the safety data from the first two patients enrolled in the SUNRISE trial, the independent Data Safety Monitoring Board, or DSMB, overseeing the SUNRISE trial recommended continuation of the trial without modification. Albumin-2A detection together with the DSMB continuation recommendation enabled us to begin enrolling two patients in the higher dose cohort (with ages ranging three to twelve years old), and two patients in the younger age group (six months to two years old) at the lower dose.

 

In late October 2021, the third patient dosed in the SUNRISE trial, who received 5 x 1013 vg/kg of LB-001 and was in younger age group, experienced a drug-related serious adverse event, or SAE. The SAE was noted during a scheduled visit that took place two weeks after dosing. This SAE was categorized as a case of thrombotic microangiopathy, or TMA, which has been previously reported in association with other AAV genetic therapies. We announced in December 2021 that the SAE experienced by the third patient had resolved. We reported the SAE to the DSMB along with a proposed response plan, which was endorsed by the DSMB. The plan included proposed protocol amendments to increase patient monitoring. In accordance with our regulatory obligations, we also reported the SAE to the FDA and the Saudi Arabia Food & Drug Authority.

 

In January 2022, the fourth patient dosed in the SUNRISE trial, who received 5 x 1013 vg/kg of LB-001 and was in the younger age group, experienced a drug-related SAE, which was categorized as a case of TMA. Following a hospitalization, the patient was discharged and the SAE has now resolved. We reported the SAE to the FDA and the Saudi Arabia Food and Drug Authority in accordance with our regulatory obligations. We also reported the SAE to the DSMB. On February 2, 2022, we announced that the FDA notified us that the IND for LB-001 has been placed on clinical hold. We are working closely with the FDA and the DSMB to determine the next steps for the SUNRISE trial and the LB-001 program. Until we have more clarity regarding the impact of the clinical hold, we have suspended guidance on the timing of announcing interim data for the SUNRISE trial.

 

In addition to the Phase 1/2 SUNRISE trial, we have also completed a retrospective natural history study designed to evaluate disease progression in pediatric patients with MMA. These data helped to provide us with a better understanding of the natural progression of the disease, the impact of a liver transplant on the outcomes of MMA patients and potential endpoints such as the relevance of methylmalonic acid levels on clinical outcomes, with the goal of informing our future clinical development in MMA and our discussions with regulatory agencies as we look toward advancing our MMA program. We presented preliminary findings from our retrospective natural history study at the American College of Medical Genetics in April 2021.

 

In July 2019, the FDA granted rare pediatric disease designation for LB-001 for the treatment of MMA, and in April 2019, the FDA granted orphan drug designation for LB-001 for the treatment of MMA. In November 2020, the FDA granted fast track designation for LB-001 for the treatment of MMA, and in June 2021, the European Commission granted orphan drug designation to LB-001 for the treatment of MMA.

 

LB-001 Preclinical Data

 

Preclinical data for LB-001 was generated in mouse models of MMA. When the MUT gene was rendered completely non-functional (MUT-/-), these mice died within the first few days of life if left untreated. To have a model that is more usable, a second mouse model of MMA, called MCK-MUT, was generated, which was a modification of the MUT -/- mouse in which a functional copy of the mouse MUT gene was placed under the control of the creatine kinase promoter to drive MUT

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expression in the muscle. This partially rescued the lethal phenotype of MUT-/- mice and allowed mice to survive longer while still exhibiting many of the phenotypic changes seen in MMA patients.

 

In initial studies, where neonatal MCK-MUT mice received single injections of a murine GeneRide construct of LB-001, expression of MUT was observed and the mice showed significant improvements in weight gain compared to untreated MCK-MUT mice. GeneRide-treated MCK-MUT mice also had significant reductions in plasma levels of methylcitrate and methylmalonic acid, disease-relevant toxic metabolites and diagnostic biomarkers that accumulate in patients with MMA.

 

In subsequent studies, a diet management protocol was implemented for the MCK-MUT mice to better mimic the patient experience. Neonatal and adult mice received single injections of a murine GeneRide construct of LB-001. The diet managed mouse model of severe MMA allowed for the demonstration of efficacy with a clear improvement in animal survival, protection from body weight loss, and maintenance of lower circulating methylmalonic acid levels compared to vehicle-treated control animals in response to protein challenge that is designed to mimic metabolic stress. The results showed statistically significant improvements in body weight, and a reduction in plasma levels of methylmalonic acid.

 

The presence of a functional MUT enzyme has been observed in preclinical studies to provide a selective advantage to hepatocytes over those lacking MUT. Over time, this selective advantage leads to an increased proportion of liver cells that contain the functional copy of MUT. This can be observed in an experiment we conducted in mice in which a murine GeneRide construct was introduced into mice with and without a functioning native copy of MUT in the liver. The initial GeneRide integration frequencies in both sets of mice were less than 4%. Over time, the number of modified cells remained the same in mice that naturally express MUT in the liver (MUT+/- in liver). However, after more than one year, and at shorter timepoints, in the mice genetically deficient in liver MUT (MUT-/- in liver), the percent of cells expressing MUT increased to 24%. This selective advantage was also observed as early as 1.5, 3, and 6 months and could be attributed to improvements in mitochondrial function as a result of MUT expression and restoration of the deficient amino acid metabolic pathway. The increase in genome edited hepatocytes also led to an increase in the circulating biomarker albumin-2A over time.

 

In contrast to conventional AAV gene therapy approaches, in which the percentage of cells containing the therapy decreases over time as cells replicate and lose the virally encoded transgene, in the MMA mouse studies, the percentage of cells containing a MUT GeneRide construct increased over time. These results support our belief that a single administration may provide life-long benefits.

 

LB-401 for the Treatment of Hereditary Tyrosinemia Type 1

 

In December 2021, we announced the nomination of a new development candidate, LB-401, for the treatment of HT1. This development candidate is based on our GeneRide platform. HT1 is a rare, genetic disorder characterized by elevated blood levels of the amino acid tyrosine that affects 1 in 100,000 to 120,000 newborns worldwide. This condition is caused by a shortage of the enzyme fumarylacetoacetate hydrolase, or FAH, one of the enzymes required for the multi-step process that breaks down tyrosine.

 

In preclinical studies we presented at the 2021 ESGCT Annual Meeting in October 2021, the data in HT1 models with acute liver damage showed that GeneRide-edited hepatocytes repopulated the entire liver within four weeks post-administration, replacing the diseased hepatocytes with corrected hepatocytes. HT1 mice that received the GeneRide-FAH vector were no longer reliant on the current standard of care for the disease, and demonstrated restored normal body growth, liver function, and undetectable succinyl acetone levels.

 

Other GeneRide Development Programs

 

Also based on our GeneRide technology, we completed the first phase of preclinical development of our product candidate, LB-301, for the treatment of CN, a rare pediatric disease affecting approximately 1 in 1,000,000 newborns globally, in collaboration with Takeda. In initial proof-of-concept studies, a murine GeneRide construct of LB-301was used to correct the gene deficiency in an animal model of CN. The introduction of UGT1A1 into the albumin locus in mouse liver cells resulted in normalization of bilirubin levels and long-term survival of mice deficient in UGT1A1 from less than twenty days to at least one year. Our Takeda collaboration to further develop LB-301 in CN, resulted in the extension of our proof-of-concept data and was reported at American Society of Gene and Cell Therapy, or ASGCT, Annual Meeting in May 2020. In these reported studies, neonatal mice treated with a murine GeneRide construct of LB-301 resulted in a survival benefit and a dose-dependent reduction in total circulating bilirubin. The bilirubin levels achieved were within the range of that observed in patients with Gilbert’s syndrome (1-6mg/dL), a mild liver disorder usually requiring no medical treatment. Moreover, through a collaboration with Dr. Andrés Muro at the International Centre for Genetic Engineering and Biotechnology in

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Trieste, Italy, we demonstrated that GeneRide treatment could improve motor discoordination in preclinical mouse models of CN.

 

In addition, we are developing treatments based on our GeneRide technology for two indications in collaboration with Daiichi. We also demonstrated proof of concept of our GeneRide platform in mouse models of hemophilia B, A1ATD, and Wilson disease.

 

sAAVy Platform

 

The Company's gene delivery engine, sAAVy, is an AAV capsid engineering platform designed to optimize gene delivery for treatments in a broad range of indications and tissues. We are developing sAAVy for use in gene editing and gene therapy programs. sAAVy is an evolutionary and iterative capsid development platform structured around three important components:

 

 

Novel capsid engineering. We seek to create large libraries of AAV capsids with novel sequences generated by DNA shuffling, followed by selection and screening in a translationally relevant humanized mouse model. We are collaborating with CMRI to create these libraries.

 

 

 

Selection in clinically relevant models. AAV capsids are designed to be highly efficient in delivering their contents to specific target tissues, such as the liver. Natural serotypes and engineered AAV capsids are screened and selected in mice and often show reduced efficacy from mouse to human. Extensive work has been done by our founders to identify capsids better suited for human use in indications that target the liver. Our sAAVy platform uses an innovative way to screen very diverse synthetic capsid libraries and to select the best human cell-tropic capsids using clinically relevant animal models, like chimeric humanized mice and NHPs. This approach has yielded a set of capsids highly efficient at functional transduction of human hepatocytes in a humanized mouse model. For example, see Figure 6 for data from the first capsid from sAAVy, sL65. At the ASGCT 2020 Annual Meeting in May 2020, CMRI presented data showing that novel capsids delivered highly efficient functional transduction of human hepatocytes in a humanized mouse model. Based on these data, we believe the top-tier capsid candidates from this effort demonstrated the potential to achieve significant improvements over benchmark AAVs that are currently in clinical development. We announced data generated from translational animal models using sL65 at the ASGCT 2021 Annual Meeting in May 2021. In addition, in January 2021, we announced the extension of our collaboration with CMRI to continue to develop next-generation capsids for gene therapy and gene editing applications in the liver as well as additional tissues.

 

 

 

Process development. We have also been able to achieve high production yields using LogicBio’s proprietary process compared to published data on AAV yields from various expression systems. For more information, see “Manufacturing.”

 

 

sL65 improves functional transduction compared to benchmark capsids, AAV2, AAV8 and LK03

 

 

 

 

 

 

 

 

 

 

Figure 6. sL65 showed improved transduction and expression (functional transduction right panel) where sL65 demonstrates a 10-fold improvement over AAV8 and a 2-fold improvement over LK03.

 

Based on our sAAVy technology, we are developing gene therapy candidates utilizing, among other things, sL65, for the treatment of Fabry and Pompe diseases in collaboration with CANbridge. We also granted CANbridge an option to obtain an exclusive worldwide license to certain of our intellectual property rights, including those relating to sL65, to develop and commercialize gene therapy candidates for the treatment of two additional indications.

 

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Manufacturing

 

Our genome editing and gene therapy product candidates are manufactured as viral vectors. Viral vector manufacturing is a complex process due to several factors, including the following:

 

 

the use of complex biological raw materials, including plasmid DNA, and cell banks, that need to comply with stringent regulatory requirements;

 

the use of complex manufacturing methods, such as transfection of suspension mammalian cell culture in large bioreactors (transfection is the process by which plasmid DNA enters the cells), and purification of intact viral particles;

 

the need to produce high-concentration, high purity drug product; and

 

the challenges associated with scale-up, batch-to-batch consistency and product characterization, including measurement of potency and quality.

 

We have built extensive internal non-GMP process development, analytical development and vector development capabilities that are designed to optimize certain components of viral vector manufacturing, including the following:

 

 

Improved production yields. One challenge facing gene editing and gene therapy product candidates manufactured as viral vectors is production yield. Improvements in production yields have the potential to make drug product available to more patients in need by decreasing the drug product cost of goods. Initial results from our proprietary manufacturing process have demonstrated significantly improved production yields in comparison to published results (see Figure 7).

 

Increased drug product purity. Another challenge facing gene editing and gene therapy product candidates manufactured as viral vectors is that, over the last several years, the occurrence of undesirable side effects in clinical trials have led the industry stakeholders and regulatory authorities to look for higher levels of purity of drug product for use in humans. The proprietary methods developed by our internal team are designed to increase the purity of drug product.

 

Decreasing “empty” capsids. A challenge facing AAV vector manufacturing in particular is the formation of an excess of what are known as “empty” capsids, which are unable to provide a therapeutic benefit and may contribute to exacerbating adverse effects. Our internal team has developed proprietary and scalable methods designed to decrease the proportion of empty capsids in our drug product.  

 

Reliable characterization methods.  We have invested resources in developing a large panel of methods to enable accurate and consistent characterization of our clinical supply of our lead product, LB-001, that we can leverage for use in our other development programs if and as we optimize the drug product from those programs for use in humans.  

 

We do not own or operate, and currently have no plans to establish, any GMP manufacturing facilities. We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for clinical testing and commercial manufacture of any drug we may commercialize. To date, we have obtained the clinical supply of LB-001 for our SUNRISE trial on a purchase order basis and do not have long-term supply arrangements in place. We rely primarily on single-source third-party suppliers to manufacture and supply our drugs and their raw materials and may from time to time explore opportunities to identify and qualify additional manufacturers to provide cell banks, plasmids, drug substance and drug product.

 

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Figure 7. Comparison of production yields among manufacturing platforms.

 

Competition

 

The biotechnology and pharmaceutical industries, including the gene editing and gene therapy fields, are characterized by rapidly advancing technologies, intense competition and a strong emphasis on intellectual property and proprietary products and processes. While we believe that our technology, development experience and scientific knowledge provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies, and public and private research institutions that conduct research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing and commercialization. Not only must we compete with other companies that are focused on gene editing and gene therapy technologies, any product candidate that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

 

Our focus is the development of genetic medicines using our GeneRide and sAAVy technologies. If our current programs are approved for the indications we are pursuing or contemplate we may pursue, they may compete with other products currently under development, including gene editing and gene therapy products. There are a number of companies developing nuclease-based gene editing technologies using CRISPR/Cas9, TALENs, meganucleases, Mega-TALs and ZFNs, including bluebird bio, Caribou Biosciences, CRISPR Therapeutics, Editas Medicine, Intellia Therapeutics, Sangamo Therapeutics, Precision BioSciences, and Graphite Bio. We may also compete with companies developing gene therapy products, including Homology Medicines, Astellas Pharma, Pfizer, bluebird bio, uniQure and Generation Bio. There are also companies pursuing base editing technologies, including Beam Therapeutics.

 

Any products we may develop could also face competition from other products approved to treat the same disease based on other types of therapies, such as small molecule, antibody or protein therapies. There are several companies developing competing products that target MMA, the indication for which we are developing LB-001. These companies include Moderna Therapeutics with an mRNA-based approach, Selecta Biosciences using an AAV gene therapy, and HemoShear Therapeutics using a small molecule. If any of our competitors obtains regulatory approval for a treatment for MMA, it could negatively affect our ability to successfully commercialize LB-001, if approved.

 

There are several companies developing competing products that target CN, the indication for which we conducted research activities for LB-301, including Genethon, Selecta Biosciences, and the Institute for Life Changing Medicines. If any of our competitors obtain regulatory approval for a treatment for CN, it could negatively affect our ability to successfully commercialize LB-301.

 

Additionally, other companies may have or be developing competing products that target HT1, the indication for which we are developing LB-401. If any of our competitors obtain regulatory approval for a treatment for HT1, it could negatively affect our ability to successfully commercialize LB-401.

 

Many of our current or potential competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials

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and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical, biotechnology and gene therapy industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer or more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. The key competitive factors affecting the success of all of our programs are likely to be their efficacy, safety, convenience and availability of reimbursement.

 

Furthermore, we rely upon a combination of patents and trade secret protection, as well as license and confidentiality agreements to protect the intellectual property related to our proprietary technologies, product candidate development programs and product candidates. Our success depends in large part on our ability to secure and maintain patent protection in the United States and other countries with respect to any current or future product candidates. If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained or in-licensed is not sufficiently broad or if the validity of such patent is threatened, we may not be able to compete effectively in our markets, as it could create opportunities for competitors to enter the market or dissuade other companies from collaborating with us to develop products and technology, any of which would hurt our competitive position and could impair our ability to successfully commercialize our product candidates in any indication for which they are approved. For more information regarding these competitive risks, see “Risk Factors—Risks Related to Commercialization.”

 

Intellectual Property

 

Our commercial success depends in part on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operate without infringing the valid, enforceable patents and proprietary rights of third parties. We seek to protect our proprietary position by, among other things, exclusively licensing and filing U.S. and certain foreign patent applications related to our platform technology, existing and planned programs, and improvements that are important to the development of our business, where patent protection is available. We also rely on trade secrets, know-how, continuing technological innovation, and confidential information to develop and maintain our proprietary position and protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. We additionally rely on regulatory protection afforded through orphan drug designations, data exclusivity, market exclusivity, and patent term extensions where available.

 

Our in-licensed patents and patent applications are directed to various aspects of our gene insertion and gene targeting technologies, including technology applied to treatment of human diseases by targeted insertion and expression of therapeutic transgenes and viral vector technology for transgene delivery. The licenses are, in some cases, limited to certain technical fields and/or therapeutic indications. We intend to pursue, when possible, additional patent protection, including filing patent applications seeking to protect composition of matter, method of use, and process claims, directed to our product development programs. We also intend to pursue rights to existing technologies through one or more licenses from third parties.

 

Notwithstanding these efforts, we cannot be sure that patents will be granted with respect to any patent applications we have licensed or may license or file in the future, and we cannot be sure that any patents we have licensed or patents that may be licensed or granted to us in the future will not be challenged, invalidated, or circumvented or that such patents will be commercially useful in protecting our technology. Moreover, trade secrets can be difficult to protect. While we have confidence in the measures we take to protect and preserve our trade secrets, such measures can be breached, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. For more information regarding the risks related to our intellectual property, please see “Risk Factors—Risks Related to Our Intellectual Property.”

 

Our intellectual property portfolio as of this filing is summarized below. For some of our pending patent applications, prosecution has yet to commence. Prosecution is a lengthy process, during which the scope of the claims initially submitted for examination by the U.S. Patent and Trademark Officer, or USPTO, is often significantly narrowed by the time they issue, if they issue at all. We expect this to be the case with respect to our pending patent applications referred to below.

 

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Nucleic Acid Delivery

 

We have non-exclusively licensed from The Board of Trustees of the Leland Stanford Junior University, or Stanford, two families of patents and patent applications, or Family 1 and Family 2, relating to AAV capsid polypeptides with improved properties useful for nucleic acid transfer applications and their manufacture and methods of use. Family 1 includes four granted U.S. patents in the U.S. and one granted European patent. The issued U.S. patents in Family 1 are expected to expire in 2027. Patent term extensions could result in later expiration dates. Family 2 includes three granted U.S. patents, one granted European patent, one granted Hong Kong patent, and pending applications in the United States, Europe, and Hong Kong. The issued U.S. patents in Family 2, and any that may later issue from a pending Family 2 patent application, are expected to expire in 2032. Patent term adjustments or patent term extensions could result in later expiration dates. For more information regarding the terms of our license to Family 1 and Family 2, please see “License Agreements.”

 

Non-Disruptive Gene Targeting

 

We have exclusively licensed from Stanford and the Board of Regents of the University of Texas System, or UT or University of Texas, patent applications relating to technology for the insertion of a gene or genes of interest at a target genomic locus without disruption of endogenous gene expression, or Family 3. Family 3 includes one granted European patent and pending patent applications in the United States and Europe. Any patent that may issue from a pending Family 3 patent application is expected to expire in 2033. Patent term adjustments or patent term extensions could result in later expiration dates. For more information regarding the terms of our license to Family 3, please see “License Agreements.”

 

Genome Editing without Nucleases

 

We have exclusively licensed from Stanford patent applications relating to technology for the nuclease-free insertion of a gene or genes of interest at a target genomic locus without disruption of endogenous gene expression, or Family 4. Family 4 includes one granted U.S. patent, one granted Israeli patent, one granted Australian patent and patent applications pending in eleven jurisdictions including the United States, Europe, Canada, China, Korea, and Japan. Any patent that may issue from a pending Family 4 patent application is expected to expire in 2035. Patent term adjustments or patent term extensions could result in later expiration dates. For more information regarding the terms of our license to Family 4, please see “License Agreements.”

 

AAV Capsids

 

We have non-exclusively licensed from Stanford patent applications, or Family 5, relating to recombinant AAV capsids resistant to pre-existing human neutralizing antibodies and/or characterized by increased transduction or tropism in human liver tissue or hepatocyte cells, useful for nucleic acid transfer applications and their manufacture and methods of use. Family 5 includes two granted U.S. patents, one granted European patent, one granted Japanese patent and patent applications pending in three jurisdictions including Australia, Canada and China. The issued U.S. patent in Family 5, and any patent that may issue from a pending Family 5 patent application, are expected to expire in 2037. Patent term adjustments or patent term extensions could result in later expiration dates. For more information regarding the terms of our license to Family 5, please see “License Agreements.”

 

We also jointly own a pending Patent Cooperation Treaty, or PCT, patent application as part of our collaboration with CMRI, relating to novel AAV capsids including the sL65 capsid and capsids that facilitate efficient transduction of human cells, such as human hepatocytes, when contained in an AAV vector.  If granted, this patent application can provide the basis for patent protection that is expected to expire in 2041.  We announced expansion of our partnership with CMRI to develop next-generation AAV vectors for a range of gene editing and gene therapy applications in the treatment of serious diseases of the liver and other tissues.  For more information, please see the “sAAVy Platform” section above.

 

Synthetic Codon-optimized MUT Gene

 

We have non-exclusively licensed from the U.S. Department of Health and Human Services, as represented by the National Human Genome Research Institute, an Institute of the National Institutes of Health, or the NIH, patents and patent applications relating to synthetic polynucleotides encoding methylmalonyl-CoA mutase, or synMUT, and exhibiting augmented expression in cell culture and/or in a subject. The synMUT license includes at least four granted U.S. patents and one granted European patent. The issued U.S. patents under the synMUT license and any that may later issue from a pending patent application are expected to expire in 2034. Patent term adjustments or patent term extensions could result in later expiration dates. For more information regarding the terms of the synMUT license, please see “License Agreements.”

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LogicBio-Owned Patent Filings

 

On August 10, 2018, we filed a U.S. Provisional application, followed by a PCT application that was filed on October 30, 2018. The applications are directed to non-disruptive gene therapy for the treatment of MMA. Applications have been filed in this patent family in each of Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, India, Japan, S. Korea, Mexico, Russia, Saudi Arabia, and the United States.

 

On April 15, 2019, we filed a U.S. Provisional application, followed by a PCT application that was filed on April 14, 2020.  The applications are directed to technologies for improving gene therapies, including through monitoring and/or assessment of a gene therapy treatment after administration. National phase applications have been filed in this patent family in each of Australia, Brazil, Canada, China, Europe, Israel, India, Japan, S. Korea, Mexico, New Zealand, Russia, Saudi Arabia, Singapore, and the United States.

 

The term of individual patents depends upon the legal term for patents in the countries in which they are obtained. In most countries, including the United States, the patent term is 20 years from the earliest filing date of a non-provisional patent application. In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent. The term of a patent that covers a drug or biological product may also be eligible for patent term extension when FDA approval is granted, provided statutory and regulatory requirements are met. In the future, if and when our product candidates receive approval by the FDA or foreign regulatory authorities, we expect to apply for patent term extensions on issued patents covering those products, depending upon the length of the clinical trials for each product and other factors. There can be no assurance that any of our pending patent applications or the pending patent applications licensed to us will issue or that we will benefit from any patent term extension or favorable adjustment to the term of any of our patents or the pending patent applications licensed to us.

 

As with other biotechnology and pharmaceutical companies, our ability to maintain and solidify our proprietary and intellectual property position for our product candidates and technologies will depend on our success in obtaining effective patent claims and enforcing those claims, if granted. However, our pending patent applications, and any patent applications that we may in the future file or license from third parties may not result in the issuance of patents. We also cannot predict the breadth of claims that may be allowed or enforced in our patents or patents that we license. Any issued patents that we may receive or license in the future may be challenged, invalidated or circumvented. For example, we cannot be certain of the priority of inventions covered by pending third-party patent applications. If third parties prepare and file patent applications in the U.S. that also claim technology or therapeutics to which we have rights, we may have to participate in interference proceedings in the USPTO to determine priority of invention, which could result in substantial costs to us, even if the eventual outcome is favorable to us, which is highly unpredictable. In addition, because of the extensive time required for clinical development and regulatory review of a treatment method or product candidate we may develop, it is possible that, before any of our technology can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby limiting protection such patent would afford the respective technology and any competitive advantage such patent may provide.

 

In addition to patents, we rely upon unpatented trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, by executing collaboration agreements containing confidentiality obligations with our collaborators, and agreements containing non-competition, non-solicitation, confidentiality, and invention assignment obligations with our employees and consultants, including our scientific advisors. The confidentiality agreements we enter into are designed to protect our proprietary information and the agreements or clauses requiring assignment of inventions to us are designed to grant us ownership of technologies that are developed through our relationship with the respective counterparty. We cannot guarantee, however, that these agreements will afford us adequate protection of our intellectual property and proprietary information rights.

 

Trademarks

 

Our trademark portfolio currently includes a trademark registration in the United States for the mark LOGICBIO, an allowed trademark application in the United States for the mark GENERIDE, and a pending trademark application in the United States for the mark SAAVY.

 

 

License and Collaboration Agreements

 

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CANbridge Agreement

 

In April 2021, we entered into an Exclusive Research Collaboration, License and Option Agreement, or the CANbridge Agreement, with CANbridge.

 

Under the terms of the CANbridge Agreement, we granted CANbridge (a) an exclusive worldwide license to certain of our intellectual property rights, including those relating to sL65 to develop, manufacture and commercialize gene therapy candidates for the treatment of Fabry and Pompe diseases, or the Fabry and Pompe License, (b) an option to obtain an exclusive worldwide license to certain of our intellectual property rights, including those relating to sL65, to develop and commercialize gene therapy candidates for the treatment of two additional indications, or the Candidate Option, and (c) an exclusive option to obtain an exclusive license to develop and commercialize LB-001 for the treatment of MMA, or the LB-001 Option, in Greater China. Pursuant to the CANbridge Agreement, we and CANbridge are collaborating to develop the gene therapy candidates referenced in (a) above for the treatment of Fabry and Pompe diseases plus, upon CANbridge’s exercise of the applicable Candidate Option, two additional indications under a mutually agreed research plan, or the CANbridge Research Plan.

 

Under the CANbridge Agreement, we received an upfront, non-refundable and non-creditable payment of $10 million from CANbridge, a portion of which we paid to a third party under certain of our in-licensing obligations. In addition, CANbridge is obligated to reimburse us for research and development costs we incur for activities related to the development of the gene therapy candidates for Fabry and Pompe diseases, under the CANbridge Research Plan.

 

We are eligible to receive up to $542 million in aggregate from CANbridge, contingent on the achievement of specified clinical, regulatory and sales milestones relating to the named gene therapy candidates for Fabry and Pompe diseases, the additional indications for which CANbridge exercises the Candidate Option, and the payment of any option exercise fees. We are also eligible to receive up to $49 million in aggregate clinical, regulatory and sales milestones for LB-001, subject to the exercise of the LB-001 Option, and the payment of the LB-001 Option fee. CANbridge is obligated to pay us royalties based on an escalating tiered, mid- to high-single digit percentage of the annual worldwide net sales for each non-LB-001 indication pursued. In addition, CANbridge will pay us royalties based on an escalating tiered, high-single digit to mid-double digit percentage of the annual Greater China net sales for LB-001 for the treatment of MMA, subject to the exercise of the LB-001 Option.

 

The term of the CANbridge Agreement will continue on a product-by-product basis until the expiration of the royalty period. If CANbridge exercises the LB-001 Option in Greater China, the term of the CANbridge Agreement will continue as long as such product is being commercialized.

 

The Board of Trustees of the Leland Stanford Junior University License Agreements

 

In December 2015, as restated in January 2018, we entered into a license agreement with Stanford pursuant to which we obtained an exclusive, worldwide license to make, have made, use, import, offer to sell and sell products covered by certain patent rights to the GeneRide technology owned by Stanford within certain fields of use.

 

This exclusive license grant is limited to the following fields: (a) human therapeutics to treat MMA, propionic acidemia, HIV, influenza, malaria, CN, HT1, Wilson disease, hemophilia B, Glycogen Storage Disease 1 and Glycogen Storage Disease 3, progressive familial intrahepatic cholestasis type 2 (PFIC-2) within the ABCB11 gene, lysosomal acid lipase deficiency (LAL-D), including Wolman Disease with the LIPA gene, and (b) the prevention, treatment or diagnosis via genome editing without a nuclease of certain additional indications with respect to liver tissue and certain other tissues to be nominated by us, subject to the terms of the agreement.

 

Pursuant to the Stanford license agreement, we also obtained (i) a non-exclusive license to make, have made, use, import, offer to sell and sell products covered by the foregoing GeneRide patent rights in the field of human therapeutics to treat hemophilia A (via genome editing without a nuclease) and A1ATD; (ii) a non-exclusive license to make, have made, use, import, offer to sell and sell products covered by certain patent rights with respect to AAV capsids owned by Stanford within the same fields of use that apply to the license under the patent rights to the GeneRide technology owned by Stanford; (iii) an exclusive license to make, have made, use, import, offer to sell and sell products covered by certain capsid-related patent rights owned by Stanford within the field of the diagnosis, prevention or treatment of phenylketonuria in humans; and (iv) a non-exclusive license to certain related know-how.

 

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The license grant from Stanford under the patent rights to the GeneRide technology owned by Stanford does not extend to autologous ex vivo use for non-episomal DNA delivery and maintenance for hematopoietic stem cells for sickle cell or beta thalassemia.

 

The rights licensed to us are sublicensable through a single tier without Stanford’s consent.

 

Under the terms of the agreement, as amended, we paid a one-time, non-refundable upfront fee of $75,000, issued Stanford 130,894 shares of our common stock, and subsequently issued 56,097 additional shares of common stock pursuant to Stanford’s anti-dilution rights under the agreement. In addition, pursuant to its rights under the agreement, Stanford purchased shares of our Series A Preferred Stock and Series B Preferred Stock. We are required to pay Stanford low single-digit royalties on net sales of products as well as a portion of non-royalty sublicensing revenues. Our obligation to pay royalties will expire (i) on country-by-country basis with respect to net sales of any specified product sold, used, manufactured or imported in an applicable country until the expiration of the last valid claim within the licensed patents in such country covering such licensed product; and (ii) with respect to net sales of any such product, ten years from the first commercial sale of any licensed product. We are also obligated to pay annual maintenance fees, which are fully creditable against any royalty payments made by us, and up to an aggregate amount of $1.3 million of development milestone payments. We were also required to reimburse Stanford for all patent prosecution costs incurred prior to the agreement with respect to the patent rights to the GeneRide technology and for all future patent prosecution costs with respect to the patent rights to the GeneRide technology. We do not have the right to control patent prosecution with respect to the licensed patent applications, but we do have the first right to enforce any patents which may issue from these patent applications.

 

The term of the license agreement will continue so long as there is a valid claim of a licensed patent. Stanford may terminate the agreement upon at least 60 days’ notice to us if (i) we are in material default in the provision of any report or payment of any amounts due to Stanford under the agreement; (ii) we do not use commercially reasonable efforts to develop or commercialize licensed products; (iii) we do not achieve certain diligence milestones within the mutually agreed timeline; (iv) we are in material breach of any provision of the agreement; or (v) provide any materially false report to Stanford. We may terminate the agreement at any time upon at least 30 days’ notice to Stanford.

 

The University of Texas License Agreement

 

In May 2018, we entered into a license agreement with the University of Texas, pursuant to which we obtained an exclusive, worldwide license to manufacture, have manufactured, distribute, have distributed, use, offer for sale, sell, lease, loan or import products covered by certain patent rights to the GeneRide technology owned by the University of Texas (jointly with Stanford) within certain fields of use.

 

This exclusive license grant is limited to the following fields: (a) human therapeutics to treat MMA, propionic acidemia, HIV, influenza, malaria, CN, HT1, Wilson disease, hemophilia B, Glycogen Storage Disease 1, Glycogen Storage Disease 3 and any other human disease of liver tissue that affects less than 200,000 persons in the United States as of the effective date of the agreement, and (b) the prevention, treatment or diagnosis via genome editing without a nuclease of certain additional indications with respect to certain tissues to be nominated by us, subject to the terms of the agreement. Pursuant to the University of Texas license agreement, we also obtained a non-exclusive license to certain related know-how. The rights licensed to us are sublicensable through multiple tiers without the consent of the University of Texas.

 

Under the terms of the agreement, we paid a one-time, non-refundable upfront fee of $25,000. We are required to pay the University of Texas low single-digit royalties on all net sales of products as well as a portion of any sublicensing revenues. We are also obligated to pay annual maintenance fees, which are fully creditable against any royalty payments made by us, and certain development and sales milestone payments up to $3.0 million. We are also required to reimburse the University of Texas for all future patent prosecution costs on a pro rata basis with other licensees. We do not have the right to control patent prosecution with respect to the licensed patent applications, but we do have the first right to enforce any patents which may issue from these patent applications.

 

The term of the license agreement will continue on a country-by-country and product-by-product basis until the later of the expiration of the last-to-expire valid claim of a licensed patent that covers such product in such country and 10 years from the date of the first commercial sale of such product in such country. The University of Texas may terminate the agreement in its entirety or with respect to any applicable part of the licensed subject matter, field of use or licensed territory, or convert the exclusive license to a non-exclusive license, if (i) we fail to timely make a required payment to the University of Texas under the agreement; (ii) we are in material breach of a provision of the agreement and fail to timely cure such breach; (iii) we breach any payment obligation under the agreement three or more times in any 12-month period; (iv) we initiate, or an affiliate or sublicense initiates, a patent challenge against a licensed patent; or (v) we become bankrupt or insolvent, our

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board elects to liquidate our assets or dissolve the business, we cease business operations, we make an assignment to the benefit of our creditors, or our business or assets are otherwise placed in the hands of a receiver, assignee or trustee. We may terminate the agreement in its entirety or with respect to any applicable part of the licensed subject matter, field of use or licensed territory upon at least 30 days’ notice to the University of Texas.

 

The NIH License Agreement

 

In December 2018, we entered into a license agreement with the NIH, pursuant to which we obtained a non-exclusive, worldwide license under certain specified patent rights relating to a synthetic codon-optimized MUT gene that is incorporated into the LB-001 GeneRide construct, to exploit products and practice processes that are covered by the licensed patent rights in the field of research, development, manufacture and commercialization of pharmaceutical products for the treatment or prevention of MMA using gene therapy constructs in humans. We have the right to grant sublicenses under the license granted by the NIH, concurrently with licenses of its proprietary or other in-licensed intellectual property rights, with the NIH’s prior consent, not to be unreasonably withheld. The license grant is subject to typical statutory requirements and reserved rights as required under federal law and NIH requirements, including a requirement to manufacture substantially in the United States products used or sold in the United States that embody Licensed Products or are produced through the use of Licensed Processes, each as defined in the agreement.

 

Under the terms of the License Agreement, the NIH received an upfront payment of $25,000, and is entitled to receive payments of up to an aggregate of $9.7 million upon the achievement of certain specified development, regulatory and sales-based milestones. The NIH is also entitled to receive running royalties on annual net sales of Licensed Products (subject to reductions for combination products that include Licensed Products), at certain low- to mid-single digit royalty rates, which rates vary based on the geographic market in which a sale occurs (subject to certain annual minimum royalty payments).

 

The milestones and running royalties will be payable with respect to Licensed Products that are no longer covered by the licensed patent rights in a country, if the products are the subject of orphan drug exclusivity in the country. Additionally, if we receive a priority review voucher or a foreign equivalent for a Licensed Product, we have an obligation to pay to the NIH (a) a mid-single digit percentage of the sale price of the voucher, if we sell the priority review voucher, or (b) a low-single digit percentage of the fair market value of the voucher, if the we use the voucher to obtain regulatory approval of its product for an orphan indication or in the Licensed Field. The NIH is also entitled to receive a low-single digit percentage of upfront consideration that we receive for a sublicense of the rights licensed under the License Agreement and a low-single digit percentage of any consideration received for any assignment of the License Agreement by us.

 

Under the terms of the License Agreement, we have an obligation to use reasonable commercial efforts to make Licensed Products and Licensed Processes reasonably available in the United States following first commercial sale, make reasonable quantities of Licensed Products or materials produced through the use of Licensed Processes available to patient assistance programs and achieve certain diligence milestones.

 

Unless earlier terminated, the term of the License Agreement will continue until the last to expire of the licensed patent rights and any orphan drug exclusivity covering a Licensed Product in any jurisdiction. The NIH may terminate the License Agreement if we are in default in the performance of any material obligations under the License Agreement if the default has not been remedied within ninety days after the date of notice in writing of the default. In addition, the NIH may terminate or modify, at its option, the License Agreement, if the NIH determines, taking into account the normal course of commercial development programs conducted with sound and reasonable business practices and judgment, that we (i) have willfully made a false statement of, or willfully omitted, a material fact in the license application or in any report required by the License Agreement, (ii) have committed a material breach of a covenant or agreement contained in the License Agreement, (iii) are not keeping Licensed Products or Licensed Processes reasonably available to the public after first commercial sale, (iv) cannot reasonably satisfy unmet health and safety needs or (v) cannot reasonably justify a failure to comply with its domestic manufacturing requirements under the License Agreement. We have a unilateral right to terminate the License Agreement in any country or territory by giving the NIH 60 days’ written notice.

 

Government Regulation

 

Government authorities in the United States and other jurisdictions extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, sale, distribution, post-approval monitoring and reporting, marketing and export and import of drug products. Generally, before a new drug can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific for each regulatory authority, submitted for review and approved by the regulatory authority.

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U.S. Government Regulation of Biological Products

 

In the United States, biological products, including gene editing and gene therapy products, are subject to regulation by the FDA under the Federal Food, Drug, and Cosmetic Act, or FDCA, and the Public Health Service Act, or PHSA, and their implementing regulations. Products also are subject to other federal, state and local statutes and regulations. Each clinical study protocol for a product must be reviewed by the FDA. FDA approval must be obtained before marketing of biological products.

 

Within the FDA, the Center for Biologics Evaluation and Research, or CBER, regulates gene editing and gene therapy products. FDA has indicated that it considers gene editing to fall under the category of gene therapy. The FDA has published guidance documents with respect to the development of gene therapy products. The FDA also has published guidance documents, including as recently as January 2020, related to, among other things, the overall gene therapy development process, preclinical assessment, observing subjects in gene therapy studies for delayed adverse events, potency testing, orphan drug designation and exclusivity for gene therapy products, and chemistry, manufacturing and control information in an IND for gene therapy. FDA also issued guidance documents in January 2021 addressing manufacturing considerations for licensed and investigational gene therapy products during the COVID-19 pandemic and in September 2021 describing FDA’s approach for determining whether two gene therapy products are the same or different for the purpose of assessing orphan drug exclusivity. These guidance documents apply in addition to laws and regulations governing biological products more generally.

 

The process required by the FDA before a biological product may be marketed in the United States generally involves the following:

 

 

completion of extensive preclinical studies and tests in accordance with applicable regulations, including Good Laboratory Practice, or GLP, regulations and applicable requirements for the humane use of laboratory animals or other applicable regulations;

 

 

 

submission to the FDA of an IND, which must become effective before human clinical trials may begin;

 

 

 

approval by an independent institutional review board, or IRB, or ethics committee at each clinical trial site before each trial may be initiated;

 

 

 

performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practices, or GCPs, and other clinical-trial related regulations to evaluate the safety and efficacy of the investigational product for each proposed indication;

 

 

 

submission to the FDA of a Biologics License Application, or BLA, for marketing approval that includes substantive evidence of safety, purity, and potency from results of preclinical testing and clinical trials;

 

 

 

a determination by the FDA within 60 days of its receipt of a BLA to accept the filing for review;

 

 

 

satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the biologic will be produced to assess compliance with good manufacturing practices, or cGMPs, to assure that the facilities, methods and controls used in product manufacture are adequate to preserve the biologic’s identity, strength, quality and purity and, if applicable, the FDA’s current good tissue practices, or GTPs, for the use of human cellular and tissue products;

 

 

 

potential FDA inspection of the preclinical study, LogicBio as clinical trial sponsor, and/or the clinical trial sites that generated the data in support of the BLA;

 

 

 

payment of user fees for FDA review of the BLA (unless a fee waiver applies);

 

 

 

agreement with FDA on the final labeling for the product and the design and implementation of any required Risk Evaluation and Mitigation Strategy, or REMS; and

 

 

 

FDA review and approval of the BLA, including consideration by an FDA advisory committee, if applicable, prior to any commercial marketing or sale of the product in the United States.

 

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The preclinical and clinical testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our investigational medicines and any future investigational medicines will be granted on a timely basis, or at all.

 

Preclinical Studies

 

Before testing any biological product candidate, including our product candidates, in humans, the product candidate must undergo rigorous preclinical testing. The preclinical development stage generally involves laboratory evaluations of the chemistry, formulation and stability of the product candidate, as well as trials to evaluate toxicity in animals, which support subsequent clinical testing. The conduct of the preclinical tests must comply with federal regulations and requirements, including GLP regulations.

 

The sponsor must submit the results of the preclinical studies, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. An IND is a request to the FDA to begin a clinical trial of an investigational product to humans, and must be allowed to proceed before human clinical trials may begin. An IND automatically is allowed to proceed 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions, such as concerns that human research subjects may be exposed to unreasonable health risks, and places the IND or the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before a clinical trial can begin. The FDA also may impose clinical holds on a biological product candidate at any time before or during clinical studies due to safety concerns or non-compliance. If the FDA imposes a clinical hold, studies may not recommence before the FDA formally lifts the clinical hold and then only under terms aligned between the sponsor and the FDA. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical studies to begin, or that, once begun, issues will not arise that suspend or terminate such studies.  Please see “LB-001 for the Treatment of Methylmalonic Acidemia—LB-001 Clinical Development Program” for information with respect to the clinical hold on our IND for LB-001 announced in February 2022.

 

Clinical Trials

 

The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by, or under control of, the trial sponsor, in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria and the parameters to be used to monitor subject safety and assess efficacy. Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA and other relevant health authorities as part of the IND. Furthermore, each clinical trial must be reviewed and approved by an IRB to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative, and must monitor the clinical trial until completed. There also are requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries, including on the www.clinicaltrials.gov website. Additional requirements apply when a gene editing or gene therapy study is conducted at, or sponsored by, institutions receiving NIH funding, such as the NIH Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules, which require, among other things, institutional biosafety committee review and approval, risk assessments to evaluate appropriate containment, physical containment guidelines, and reporting certain accidents and events to NIH.

 

Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:

 

 

Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are initially exposed to a single dose and then multiple doses of the product candidate. The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, side effect tolerability and safety of the drug.

 

 

 

Phase 2 clinical trials involve studies in disease-affected patients to determine the dose required to produce the desired benefits. At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified and a preliminary evaluation of efficacy is conducted.

 

 

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Phase 3 clinical trials generally involve a larger number of patients at multiple sites and are designed to provide the data necessary to demonstrate the safety and effectiveness of the product for its intended use and to establish the overall benefit/risk relationship of the product and provide an adequate basis for product approval. These trials may include comparisons with placebo and/or other comparator treatments.

 

 

Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication and are commonly intended to generate additional safety data regarding use of the product in a clinical setting. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of a BLA or, in certain circumstances, post-approval.

 

During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical study investigators. Annual progress reports detailing the safety results of the clinical studies must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA and the investigators for serious and unexpected adverse events, any findings from other studies, tests in laboratory animals or in vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. Phase 1, Phase 2 and Phase 3 clinical studies may not be completed successfully within any specified period, if at all. The FDA or the sponsor, acting on its own or based on a recommendation from the sponsor’s data safety monitoring board may suspend a clinical study at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical study at its institution if the clinical study is not being conducted in accordance with the IRB’s requirements or if the biological product has been associated with unexpected serious harm to patients.

 

Human gene editing and gene therapy products are new categories of therapeutics. Because these are relatively new and expanding area of novel therapeutic interventions, there can be no assurance as to the length of the study period, the number of patients the FDA will require to be enrolled in the studies in order to establish the safety and efficacy, of human gene editing or gene therapy products, or that the data generated in these studies will be acceptable to the FDA to support marketing approval.

 

BLA Review and Approval

 

After the successful completion of clinical studies of a biological product, FDA approval of a BLA must be obtained prior to commercial marketing. The BLA must include results of the preclinical studies and clinical trials, detailed information relating to the product’s chemistry, manufacture, controls, proposed labeling and other relevant information. In addition, under the Pediatric Research Equity Act, or PREA, as amended, a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may grant deferrals or full or partial waivers for submissions of pediatric data. Unless otherwise required by regulation, PREA does not apply to any biological product for an indication for which orphan drug designation has been granted.

 

Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. In most cases, the submission of a BLA is subject to a substantial application user fee, although the fee may be waived under certain circumstances. Under the goals and policies agreed to by the FDA under the Prescription Drug User Fee Act, or PDUFA, for original BLAs, the FDA has ten months from the 60-day filing date in which to complete its initial review of a standard application and respond to the applicant, and six months from the filing date for an application with priority review. The FDA does not always meet its PDUFA goal dates, and the review process is often significantly extended by FDA requests for additional information or clarification. The review process and the PDUFA goal date may be extended by three months if, among other things, the FDA requests or the BLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.

 

Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe and effective, for its intended use, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, safety,

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strength, quality, potency and purity. The FDA may refer applications for novel biological products or biological products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the biological product approval process, the FDA also will determine whether a REMS is necessary to assure the safe use of the biological product. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS; the FDA will not approve the BLA without a REMS, if required.

 

Before approving a BLA, the FDA typically will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. For a gene editing or gene therapy product, the FDA also will not approve the product if the manufacturer is not in compliance with GTPs, to the extent applicable. These are FDA regulations that govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissues, and cellular and tissue-based products, or HCT/Ps, which are human cells or tissue intended for implantation, transplant, infusion, or transfer into a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue-based products are tested and processed in a manner designed to prevent the introduction, transmission and spread of communicable disease. FDA regulations also require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical studies were conducted in compliance with IND study requirements and GCP requirements. To assure cGMP, GTP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.

 

Notwithstanding the submission of relevant data and information, the FDA ultimately may decide that the BLA does not satisfy its regulatory criteria for approval and deny approval. Data obtained from clinical studies are not always conclusive and the FDA may interpret data differently than we interpret the same data. If the agency decides not to approve the BLA in its present form, the FDA will issue a complete response letter that usually describes all of the specific deficiencies in the BLA identified by the FDA. The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical studies. Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval. If the FDA issues a complete response letter, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.

 

If a product receives regulatory approval, the approval is typically limited to the specific diseases, dosages, patient population and other conditions of use studied, and FDA may further limit the scope of approval depending on its review of the relevant data.  Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. The FDA may also impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a REMS. Any of these actions taken by FDA could limit the commercial value of the product.  In addition, the FDA may require post marketing clinical studies, sometimes referred to as Phase 4 clinical studies, designed to further assess a biological product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized.

 

Orphan Drug Designation

 

Under the U.S. Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making the product available in the United States for this type of disease or condition will be recovered from sales of the product in the United States. An applicant must request orphan drug designation before submitting a BLA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

 

Orphan drug designation entitles a party to financial incentives such as opportunities for limited grant funding towards clinical trial costs, research tax advantages, and user fee waivers. If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity. This means the FDA may not approve any other applications to market the same drug for the same indication, as defined by FDA, for seven years from the date of such approval, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity. Competitors, however, may receive approval of either

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a different product for the same indication or the same product for a different indication; in the latter case, because health care professionals are free to prescribe products for off-label uses, the competitor’s product could be used for the orphan indication despite our orphan exclusivity. Orphan drug exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval before we do of the same drug and same indication, as defined by the FDA, for which we are seeking. In September 2021, FDA released a final guidance, entitled “Interpreting Sameness of Gene Therapy Products Under the Orphan Drug Regulations,” detailing how it will determine “sameness” of gene therapy products under the orphan drug regulations for the purposes of orphan drug designation and exclusivity.

 

Expedited Development and Review Programs

 

The FDA has various programs, including fast track designation, breakthrough therapy and Regenerative Medicine Advanced Therapy, or RMAT, designations, accelerated approval, and priority review, which are intended to expedite or facilitate the process for the development and FDA review of drugs and biologics that are intended for the treatment of serious or life-threatening diseases or conditions and demonstrate the potential to address unmet medical needs. The purpose of these programs is to provide important new drugs and biologics to patients earlier than under standard FDA review procedures.

 

To be eligible for a fast-track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need by providing a therapy where none exists or a therapy that may be potentially superior to existing therapy based on efficacy or safety factors. Fast track designation provides opportunities for more frequent interactions with the FDA review team to expedite development and review of the product. The FDA also may review sections of the BLA for a fast-track product on a rolling basis before the complete application is submitted, if the sponsor and the FDA agree on a schedule for the submission of the application sections, and the sponsor pays any required user fees upon submission of the first section of the BLA.

 

In addition, a sponsor can request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biologic may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Drugs or biologics designated as breakthrough therapies also are eligible for priority review. The FDA must take certain actions with respect to breakthrough therapies, such as holding timely meetings with and providing advice to the product sponsor, intended to expedite the development and review of an application for approval of a breakthrough therapy.

 

Another fast-track designation program is the RMAT designation. Unlike the breakthrough therapy designation, which generally applies to various classes of drugs and biologics, the RMAT designation is limited to regenerative medicine therapies, which include cell and gene therapies, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products, but exclude human cells, tissues, and cellular and tissue based products regulated solely under Section 361 of the Public Health Service Act and 21 CFR Part 1271. This program is intended to facilitate development and expedite review of regenerative medicine therapies, which are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition and have the potential to address unmet medical needs for such condition as indicated by preliminary clinical evidence. A drug sponsor may request that the FDA designate a regenerative medicine therapy as a RMAT concurrently with or at any time after submission of an IND. A BLA for a regenerative medicine therapy that has received RMAT designation may be eligible for priority review.

 

Additionally, a product may be eligible for accelerated approval. Drug or biological products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical studies establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint that can be measured earlier than survival or irreversible morbidity and is reasonably likely to predict an effect on survival, irreversible morbidity or another clinical benefit. As a condition of approval, the FDA may require that a sponsor of a drug or biological product receiving accelerated approval perform adequate and well-controlled post-marketing clinical studies.

 

Once a BLA is submitted for a product intended to treat a serious condition, the FDA may assign a priority review designation if the FDA determines that the product, if approved, would provide a significant improvement in safety or effectiveness. Under priority review, the FDA has a PDUFA goal to review an application in six months, compared to ten

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months for a standard review. Most products that are eligible for fast track or breakthrough therapy designation also are likely to be considered appropriate to receive a priority review.

 

Another way to obtain priority review for a product is through the rare pediatric disease priority review voucher program. Under this program, the sponsor of a BLA for a biologic designated to treat a rare pediatric disease may be awarded a voucher upon approval that can be used to obtain priority review for a subsequent BLA or sold and transferred to another party seeking priority review. A rare pediatric disease is a serious or life-threatening rare disease or condition, as defined under the Orphan Drug Act discussed above, in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years. The sponsor must request the voucher upon submission of the BLA for the rare pediatric disease biologic. Due to sunset provisions, the pediatric disease priority review voucher program was set to expire in September 2020, but Congress extended the authorization for FDA to continue operating the program through September 2024. After September 30, 2024, FDA will no longer grant rare pediatric disease priority review vouchers to those without rare pediatric disease designation, and after September 30, 2026, FDA will fully stop granting rare pediatric disease priority review vouchers unless the program is further extended. We cannot predict whether this program will be reauthorized after the new legislation sunsets and, if so, what additional conditions or requirements may be imposed.

 

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. Furthermore, fast track designation, breakthrough therapy and RMAT designation, accelerated approval and priority review do not change the standards for approval and may not ultimately expedite the development or approval process.

 

Biosimilars and Exclusivity

 

An abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product was created by the Biologics Price Competition and Innovation Act of 2009, or BPCIA, as part of the Affordable Care Act. This amendment to the PHSA, in part, attempts to minimize duplicative testing. To date, the FDA has approved a number of biosimilars, and numerous biosimilars have been approved in Europe. The FDA approved its first interchangeable biologic in July 2021. The FDA has issued several guidance documents outlining its approach to reviewing and approving biosimilars.

 

Complexities associated with the larger, and often more complex, structure of biological products as compared to small molecule drugs, as well as the processes by which such products are manufactured, pose significant hurdles to implementation that are still being worked out by the FDA.

 

A reference biological product is granted 12 years of data exclusivity from the time of first licensure of the product, and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product. “First licensure” typically means the initial date the particular product at issue was licensed in the United States. One must determine whether a new product includes a modification to the structure of a previously licensed product that results in a change in safety, purity, or potency to assess whether the licensure of the new product is a first licensure that triggers its own period of exclusivity. Whether a subsequent application, if approved, warrants exclusivity as the “first licensure” of a biological product is determined on a case-by-case basis with data submitted by the sponsor.

 

The BPCIA is complex and FDA interpretation and implementation is ongoing. In addition, recent government proposals have sought to reduce the 12-year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. As a result, the ultimate impact, implementation, and meaning of the BPCIA is subject to significant uncertainty.

 

On December 20, 2019, the Further Consolidated Appropriations Act, 2020, or FCAA 2020, became law. Section 610, entitled “Actions for Delays of Generic Drugs and Biological Products,” provides generic drug (abbreviated New Drug Application and 505(b)(2)) and biosimilar developers with a private right of action to obtain sufficient quantities of reference product from the brand manufacturer, or a generic or biosimilar manufacturer, necessary for approval of the developers’ generic or biosimilar product. If a generic drug or biosimilar developer is successful in its suit, the defendant manufacturer would be required to provide sufficient quantities of product on commercially-reasonable, market-based terms and may be required to pay the developer’s reasonable attorney’s fees and costs as well as financial compensation under certain circumstances. The purpose of Section 610 is to promote competition in the market for drugs and biological products by facilitating the timely entry of lower-cost generic and biosimilar products. We cannot determine what effect Section 610 of the FCAA 2020 may have on manufacturers that may develop biosimilar or other competing versions of our products once approved.

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Under the Best Pharmaceuticals for Children Act, or the BPCA, a biological product may also obtain pediatric market exclusivity in the United States if a sponsor conducts clinical trials in children in response to a written request from the FDA. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods. This six-month exclusivity runs from the end of other exclusivity protection.

 

Post-Approval Requirements

 

Following approval of a new product, the manufacturer and the approved product are subject to pervasive and continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting of adverse experiences with the product, product sampling and distribution restrictions, complying with promotion and advertising requirements, which include restrictions on promoting drugs for unapproved uses or patient populations (i.e., “off-label use”) and limitations on industry-sponsored scientific and educational activities. Although physicians may prescribe legally available products for off-label uses, manufacturers may not market or promote such uses. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. If there are any modifications to the product, including changes in indications, labeling or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new BLA or BLA supplement, which may require the applicant to develop additional data or conduct additional preclinical studies and clinical trials. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products.

 

FDA regulations require that products be manufactured in specific approved facilities and in accordance with cGMPs. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with cGMP regulations. These manufacturers must comply with cGMP regulations that require, among other things, quality control and quality assurance, the maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Manufacturers and other entities involved in the manufacture and distribution of approved drugs or biologics are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. The discovery of conditions that violate these rules, including failure to conform to cGMPs, could result in enforcement actions, and the discovery of problems with a product after approval may result in restrictions on a product, manufacturer or holder of an approved BLA, including voluntary recall.

 

Once approval or licensure of a drug or biologic is granted, the FDA may withdraw the approval or license if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

 

 

restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;

 

 

 

fines, warning letters or other enforcement-related letters or clinical holds on post approval clinical trials;

 

 

 

refusal of the FDA to approve pending BLAs or supplements to approved BLAs, or suspension or revocation of product approvals;

 

 

 

product seizure or detention, or refusal to permit the import or export of products;

 

 

 

injunctions or the imposition of civil or criminal penalties; or

 

 

 

consent decrees, corporate integrity agreements, debarment, or exclusion from federal healthcare programs; or mandated modification of promotional materials and labeling and the issuance of corrective information.

 

 

Foreign Regulation

 

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In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions. Although many of the issues discussed above with respect to the United States apply similarly in the context of other geographies, the approval process varies between countries and jurisdictions and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively affect the regulatory process in others.

 

Other Healthcare Laws and Regulations

 

In addition to FDA restrictions on the marketing of pharmaceutical products, we may be subject now or in the future to various federal, state and local laws targeting fraud and abuse in the healthcare industry. These laws may impact, among other things, our business or financial arrangements and relationships through which we market, sell and distribute our product candidates for which we obtain approval. These laws include, but are not limited to the following:

 

 

The federal anti-kickback statute makes it illegal for any person or entity to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay anything of value in order to induce the referral of business for which payment may be made under a federal healthcare program, such as Medicare or Medicaid;

 

 

 

Federal false claims and false statement laws, including the federal civil False Claims Act, prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent;

 

 

 

The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended, which prohibits executing a scheme to defraud any healthcare benefit program or making false statements healthcare matters and which also impose certain requirements relating to privacy, security and transmission of individually identifiable health information on certain types of entities, which include many healthcare providers and health plans with which we interact;

 

 

 

The FDCA, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing such products prior to approval or for unapproved indications and regulates the distribution of samples;

 

 

 

The U.S. Public Health Service Act, which prohibits, among other things, the introduction into interstate commerce of a biological product unless a biologics license is in effect for that product;

 

 

 

Federal laws, including the Medicaid Drug Rebate Program, that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; and

 

 

 

The so-called “federal sunshine” law, which requires pharmaceutical and medical device companies to monitor and report certain financial interactions with physicians, non-physician practitioners and teaching hospitals to the federal government for re-disclosure to the public.

 

 

Many states have similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope and may apply to claims reimbursed by private payors as well as government programs or regardless of reimbursement. Additionally, we may be subject to state laws that require pharmaceutical companies to comply with the federal government’s and/or pharmaceutical industry’s voluntary compliance guidelines, impose specific restrictions on interactions between pharmaceutical companies and healthcare providers; or require pharmaceutical companies to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures. Other state laws may require pharmaceutical companies to file reports relating to pricing and marketing information, and state and local laws that require the registration of pharmaceutical sales representatives. Finally, there are state laws governing the privacy and security of health information, many of which differ from each other in significant ways and often

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are not preempted by HIPAA. Many of these laws and regulations also contain ambiguous requirements or require administrative guidance for implementation.

 

We are also subject to the Foreign Corrupt Practices Act, or the FCPA, which prohibits any United States individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

 

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare and anti-corruption laws and regulations will involve substantial costs. Given the breadth of the laws and regulations, limited guidance for certain laws and regulations and evolving government interpretations of the laws and regulations, governmental authorities may possibly conclude that our business practices may not comply with such laws. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. Further, defending against any such actions can be costly, time-consuming and may require significant personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.

 

Coverage, Pricing and Reimbursement

 

Significant uncertainty exists as to the coverage and reimbursement status of any biological products for which we obtain regulatory approval. In the United States and markets in other countries, patients who are prescribed products generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Third-party payors include government authorities, managed care plans, private health insurers and other organizations.  Providers and patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products. If approved, sales of our product candidates will depend, in part, on the availability of coverage and adequate reimbursement from third-party payors.

 

In the United States, third-party payors are increasingly challenging the prices charged for medical products and services, examining the medical necessity and reviewing the cost effectiveness of pharmaceutical products, in addition to questioning safety and efficacy. The coverage determination process usually requires manufacturers to provide scientific and clinical support for the use of their products to each payor separately and is a time-consuming process. Third-party payors may only cover certain products approved treat a particular condition or impose controls designed to manage utilization of certain products (such as requiring prior authorization before a product will be covered or imposing higher cost obligations on patients). Even if favorable coverage is attained for one or more products for which we receive regulatory approval, adequate third-party reimbursement may not be available to enable a manufacturer to maintain price levels sufficient to realize an appropriate return on its investment in product development. Additionally, coverage and reimbursement for products can differ significantly from payor to payor. One third-party payor’s decision to cover a particular medical product does not ensure that other payors will also provide coverage for the medical product or will provide coverage at an adequate reimbursement rate.  And coverage policies and third-party reimbursement rates may change at any time, which changes may not be favorable.

 

In addition, in many foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing and reimbursement vary widely from country to country. In the European Union, governments influence the price of products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed to by the government. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost effectiveness of a particular product to currently available therapies. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. The downward pressure on health care costs in general, particularly prescription products, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross border imports from low priced markets exert a commercial pressure on pricing within a country.

 

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Healthcare Reform

 

A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and other third-party payers, however, have attempted to control costs by implementing various measures, including price-controls, restrictions on coverage and reimbursement and requirements for substitution of generic and biosimilar products for branded drug and biologic products, respectively.

 

Within the United States, federal and state governments continue to propose and pass legislation designed to reform the delivery of, or payment for, healthcare, which include initiatives to reduce the cost of healthcare.  For example, in March 2010, the U.S. Congress enacted the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, or Affordable Care Act, which expanded health care coverage through Medicaid expansion and the implementation of the individual mandate for health insurance coverage and which included changes to the coverage and reimbursement of drug products under government healthcare programs.

 

Under the Trump administration, there were ongoing efforts to modify or repeal all or certain provisions of the Affordable Care Act. For example, tax reform legislation was enacted at the end of 2017 that eliminated the tax penalty established under Healthcare Reform Act for individuals who do not maintain mandated health insurance coverage beginning in 2019. The Affordable Care Act has also been subject to judicial challenge. On June 17, 2021, the U.S. Supreme Court dismissed the latest judicial challenge to the Healthcare Reform Act brought by several states without specifically ruling on the constitutionality of the Healthcare Reform Act.

 

Beyond the Affordable Care Act, there have been ongoing health care reform efforts, including a number of recent actions. Some recent healthcare reform efforts have sought to address certain issues related to the COVID-19 pandemic, including an expansion of telehealth coverage under Medicare and accelerated or advanced Medicare payments to healthcare providers. Other reform efforts affect pricing or payment for drug products. For example, the Medicaid Drug Rebate Program has been subject to statutory and regulatory changes and the discount that manufacturers of Medicare Part D brand name drugs must provide to Medicare Part D beneficiaries during the coverage gap increased from 50% to 70%. Additional reform efforts are likely.  The Biden administration has focused on reforms that would address the high cost of drugs.  In response to an Executive Order from President Biden, the Secretary of HHS issued a comprehensive plan for addressing high drug prices that describes a number of legislative approaches and identifies administrative tools to address the high cost of drugs. And Democrats included drug pricing reform provisions reflecting elements of the plan in a broader proposed spending package in late 2021—such as capping Medicare Part D patients out-of-pocket costs; establishing penalties for drug prices that increase faster than inflation in Medicare; and authorizing the federal government to negotiate prices on certain, select high cost drugs under Medicare Parts B and D. Healthcare reform efforts have been and may continue to be subject to scrutiny and legal challenge.

 

There have also been efforts by federal and state government officials or legislators to implement measures to regulate prices or payment for pharmaceutical products, including legislation on drug importation. Recently, there has been considerable public and government scrutiny of pharmaceutical pricing and proposals to address the perceived high cost of pharmaceuticals. There have also been recent state legislative efforts to address drug costs, which generally have focused on increasing transparency around drug costs or limiting drug prices.

 

General legislative cost control measures may also affect reimbursement for our product candidates. The Budget Control Act, as amended, resulted in the imposition of 2% reductions in Medicare (but not Medicaid) payments to providers in 2013 and will currently remain in effect through 2030 (except May 1, 2020 to March 31, 2022). Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented and/or any significant taxes or fees that may be imposed on us could have an adverse impact on our results of operations.

 

While we expect that additional foreign, federal and state healthcare reform measures will be adopted in the future, we cannot predict the nature, timing or effect of such efforts. There is no assurance that federal or state health care reform will not adversely affect our future business and financial results.

 

Data Privacy and Security

 

We may be subject to privacy and security laws in the various jurisdictions in which we operate, obtain or store personally identifiable information. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business.

 

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Within the United States, our operations may be affected by HIPAA as amended by HITECH and its implementing regulations, collectively, HIPAA, which impose obligations on certain “covered entities” (most healthcare providers, health plans and healthcare clearinghouses) and certain of their “business associate” contractors with respect to safeguarding the privacy, security and transmission of individually identifiable health information. Although we believe that we currently are neither a “covered entity” nor a “business associate” under the regulations, the law may affect our interactions with customers who are covered entities or their business associates because the law affects the ability of these entities to disclose patient health information to us. Various states also have laws that regulate the privacy and security of patient information and so may affect our business operations. For example, the California Consumer Privacy Act, or CCPA, became effective on January 1, 2020. The CCPA gives California consumers (defined to include all California residents) certain rights, including the right to ask companies to disclose the types of personal information collected, specific pieces of information collected by a company, the categories of sources from which such information was collected, the business purpose for collecting or selling the consumer’s personal information, and the categories of third parties with whom a company shares personal information. The CCPA also imposes several obligations on companies to provide notice to California consumers regarding a company’s data processing activities. Additionally, the CCPA gives California consumers the right to ask companies to delete a consumer’s personal information and places limitations on a company’s ability to sell personal information, including providing consumers a right to opt out of sales of their personal information. On November 3, 2020, California voters passed a ballot initiative approving the California Privacy Rights Act, or CPRA, which will significantly expand the CCPA to incorporate additional provisions, including a requirement that the use, retention, and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents regarding retention of information. The CPRA will also expand personal information rights of California residents, including creating a right to opt out of sharing of personal information with third parties for advertising, expanding the lookback period for the right to know about personal information held by businesses, and expanding the right to erasure for information held by third parties. Most CPRA provisions will take effect on January 1, 2023, though the obligations will apply to any personal information collected after January 1, 2022.

 

Outside the United States, other data privacy and security regulations may apply. For example, the processing of personal data in the European Economic Area, or the EEA, is subject to the General Data Protection Regulation, or the GDPR, which took effect in May 2018. The GDPR increases obligations with respect to clinical trials conducted in the EEA, such as in relation to the provision of fair processing notices, exercising data subject rights and reporting certain data breaches to regulators and affected individuals, as well as how we document our relationships with third parties that process GDPR-covered personal data on our behalf. The GDPR places restrictions on the cross-border transfer of personal data from the EU to countries that have not been found by the European Commission to offer adequate data protection legislation, such as the United States. In July 2020, the Court of Justice of the European Union, or CJEU, invalidated the EU-U.S. Privacy Shield framework, or the Privacy Shield, one of the mechanisms used to legitimize the transfer of personal data from the EEA to the U.S. The CJEU decision also drew into question the long-term viability of an alternative means of data transfer, the standard contractual clauses, for transfers of personal data from the EEA to the U.S. This CJEU decision may lead to increased scrutiny on data transfers from the EEA to the U.S. generally and increase our costs of compliance with data privacy legislation.

 

Compliance with data privacy and security regulation can require allocation of resources as well as changes in operations. Any failure to comply with data protection and privacy laws could result in government-imposed fines or orders requiring that we change our practices, claims for damages by data subjects, regulatory investigations and enforcement action, litigation and significant costs for remediation, any of which could adversely affect our business. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our business, financial condition, results of operations or prospects.

 

Employees and Human Capital Resources

 

As of December 31, 2021, we had 62 full-time employees, including 43 with Ph.D. or other advanced degrees. Of these full-time employees, 47 are engaged in research and development and 15 are engaged in general and administrative activities. None of our employees is represented by a labor union or covered by a collective bargaining agreement.  We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees.

 

 

Compensation and Benefits. We provide our employees with competitive salaries, bonuses and equity awards under our equity incentive plans. We believe we offer competitive compensation and benefits packages designed to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in

 

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the achievement of our strategic goals and create value for our stockholders. We formally review employee performance annually and provide competitive merit increases, bonus payments and annual equity awards in the first quarter annually, subject to achievement of certain goals.

 

 

 

Diversity and Inclusion. We are committed to fostering an inclusive and diverse workplace in which individuals of different backgrounds can thrive. We recognize the importance of representation in our leadership team. Of the nine members of our executive leadership team, five self-identified as women and/or from a diverse racial or ethnic group, and of the nine members of our Board of Directors, three self-identified as women and/or from a diverse racial or ethnic group.

 

 

 

Employee Engagement and Development. We strive to maintain an engaged workforce. We periodically conduct employee surveys to obtain employee feedback. Our surveys are designed to provide our managers and leadership team with information on satisfaction, workplace culture, and steps we can take to build and maintain an engaged workforce.  In addition, we are committed to supporting the continued development of our employees, including through regular trainings and discussions on company- and industry-relevant topics.

 

 

 

Response to COVID-19 Pandemic. The COVID-19 pandemic continues to present a substantial public health challenge around the world. We have continued to evaluate our practices to address our employees’ health and wellbeing. We established a COVID-19 taskforce, compromised of employees from various departments and levels, which meets regularly to discuss the company’s safety practices in relation to changing circumstances.  

 

 

Corporate and Other Information

 

LogicBio Therapeutics, Inc. was incorporated under the laws of the State of Delaware in August 2014. Our principal executive offices are located at 65 Hayden Avenue, 2nd Floor, Lexington, MA 02421 and our telephone number is (617) 245-0399. Our website address is http://www.logicbio.com. The information contained in, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K.

 

We have two subsidiaries, LogicBio Australia Pty Limited, a wholly owned Australian subsidiary formed in April 2018, and LogicBio Securities Corporation, a wholly owned Delaware subsidiary formed in December 2018. In 2019, we formally liquidated LogicBio Therapeutics Research, LTD, our wholly owned Israeli subsidiary.

 

You may read our Securities and Exchange Commission, or SEC, filings, including our proxy statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, over the internet at the SEC’s website at www.sec.gov.

 

 

 

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Item 1A.

Risk Factors.

 

We face a variety of risks and uncertainties in our business. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also become important factors that affect our business. If any of the following risks occurs, our business, financial statements and future growth prospects could be materially and adversely affected.

 

Risks Related to Our Financial Position and Need for Additional Capital

 

We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future. We may never achieve or maintain profitability.

 

Investment in pharmaceutical product development and commercialization is highly speculative because it entails upfront capital expenditures and significant risk that a product candidate will fail to gain marketing approval or that an approved product will not be commercially viable. We have incurred net losses in each year since our inception, including net losses of $40.0 million for the year ended December 31, 2021. As of December 31, 2021, we had an accumulated deficit of $140.0 million. In addition, we have not commercialized any products and have never generated any revenue from product sales. Since our inception, we have devoted most of our resources to research and development, including our preclinical and clinical development activities as well as to building out our team and infrastructure. We expect to continue to incur significant additional operating losses for the foreseeable future as we seek to continue to advance LB-001, our lead product candidate, through clinical development, expand our research and development capabilities and activities, develop new product candidates and advance them through preclinical and clinical development, advance the development of our GeneRide and sAAVy technology platforms, conduct process and analytical development, conduct manufacturing activities, conduct clinical trials, seek regulatory approval and, if we receive approval from the FDA the European Medicines Agency, or EMA, or other regulatory authorities, commercialize our product candidates. Our net losses may fluctuate significantly from quarter to quarter and year to year. Because of the numerous risks and uncertainties associated with genetic medicine product development, we are unable to accurately predict the timing or amount of increased expenses, when, if ever, we will generate revenue from the commercialization of products or whether we will achieve or maintain profitability. We anticipate that our expenses will also increase substantially if and as we:

 

 

work to successfully resolve the clinical hold on and determine next steps for LB-001;

 

continue our current research programs and our preclinical development of any product candidates from our current research programs;

 

continue to conduct our clinical program for LB-001, if and when the clinical hold on LB-001 is lifted, and initiate and conduct clinical trials for any other product candidates we identify and develop;

 

seek to identify, assess, acquire and/or develop additional research programs and additional product candidates;

 

engage in transactions, including strategic, merger, collaboration, acquisition and licensing transactions;

 

seek regulatory approvals for any product candidates that successfully complete clinical trials; develop, optimize, scale and validate a manufacturing process and analytical methods for any product candidates we may develop;

 

obtain market acceptance of any product candidates we may develop as viable treatment options;

 

address competing technological and market developments;

 

maintain, expand and protect our intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio;

 

further develop our GeneRide and sAAVy technology platforms;

 

hire additional scientific, clinical, technical, quality, regulatory, general and administrative, and commercial personnel and add operational, financial and management information systems and personnel, including personnel to support our process and analytical development, manufacturing and planned future commercialization efforts;

 

make royalty, milestone or other payments under current or future in-license agreements;

 

establish and maintain supply chain and manufacturing relationships with third parties that can provide adequate products and services, in both amount, timing and quality, to support our development programs and the market demand for any product candidate for which we obtain regulatory and marketing approval;

 

lease and build new facilities, including offices and labs, as necessary to support any organizational growth;

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comply with good practice quality guidelines and regulations, or GXP, including good laboratory practice, good clinical practice, or GCP, and cGMP;

 

build out and validate clinical and commercial-scale cGMP manufacturing capabilities;

 

establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval; and

 

experience any delays or encounter issues with any of the above.

 

Furthermore, our ability to successfully develop, commercialize and license our product candidates and potentially generate product revenue is subject to substantial additional risks and uncertainties. Each program and any product candidate we develop, along with our GeneRide and sAAVy platforms, will require additional preclinical and clinical development, regulatory approval in one or more jurisdictions, process and analytical development, securing supply and manufacturing capacity, building of a commercial organization, substantial investment and significant marketing efforts before we generate any revenue from product sales. See “—Risks Related to Discovery, Development, Clinical Testing, Manufacturing and Regulatory Approval” and “—Risks Related to Commercialization.”

 

As a result of all of the above, as well as other potential factors, we expect to continue to incur net losses and negative cash flows for the foreseeable future. These net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital. The amount of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. If we are unable to develop and commercialize one or more product candidates either alone or with collaborators, or if revenue from any product candidate that receives marketing approval is insufficient, we will not achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability.

 

Under our ASC 205-40 analysis, there is “substantial doubt” that we will have sufficient funds to satisfy our obligations through the next twelve months from the date of issuance of this Annual Report on Form 10-K.

 

At December 31, 2021, we had $53.5 million of cash and cash equivalents on hand. On a quarterly basis, we are required to conduct an accounting analysis under ASC 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, or ASC 205-40. The result of our ASC 205-40 analysis is that there is “substantial doubt” that we will have sufficient funds to satisfy our obligations through the next twelve months from the date of issuance of the consolidated financial statements. Our ability to continue as a going concern is dependent on our ability to obtain the necessary financing to meet our obligations and repay our liabilities arising from the ordinary course of business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time. If we are unable to raise sufficient capital when needed, our business, financial condition and results of operations will be materially and adversely affected, and we will need to significantly modify or terminate our operational plans. Our conclusion, in accordance with ASC 205-40, that there is “substantial doubt” that we will have sufficient funds to satisfy our obligations through the next twelve months from the date of issuance of this Annual Report on Form 10-K may materially adversely affect our business, prospects, financial condition, results of operations, share price and our ability to raise capital or to enter into agreements with third parties that may be beneficial to us.

 

We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of any product candidates.

 

We expect to spend substantial amounts to complete the development of, seek regulatory approvals for and commercialize LB-001 and any other product candidate. We will require additional capital, which we may seek to raise through equity offerings, debt financings, marketing and distribution arrangements, collaborations, strategic alliances, licensing arrangements or other sources, to enable us to complete the development and potential commercialization of LB-001 and any other product candidate. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative effect on our financial condition and our ability to pursue our business strategy. For more information, see the risk factor titled “– Under our ASC 205-40 analysis, there is ‘substantial doubt’ that we will have sufficient funds to satisfy our obligations through the next twelve months from the date of issuance of this Annual Report on Form 10-K.” In addition, attempting to secure additional financing may divert the time and attention of our management from day-to-day activities and harm our product candidate development efforts.

 

Changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. Because the length of time and activities

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associated with successful development of LB-001 and any other product candidates is highly uncertain, we are unable to estimate the actual funds we will require for development and, if applicable, any approved marketing and commercialization activities. Our future funding requirements, both near and long-term, will depend on many factors, including:  

 

 

our ability to successfully resolve the LB-001 clinical hold and the time it takes to do so;

 

the scope, progress, timing, costs and results of drug discovery, preclinical development, laboratory testing, and clinical trials for our product candidates, including the ongoing development program for LB-001, which is currently on clinical hold and includes our Phase 1/2 SUNRISE clinical trial of LB-001 in MMA, and process development and manufacturing activities for LB-001;

 

the outcome, timing and cost of following the advice of and complying with regulatory requirements and decisions made by the FDA, EMA and other regulatory authorities, including resolving the LB-001 clinical hold and any potential clinical holds that may be imposed on us in the future;

 

the impact of the COVID-19 pandemic on our ability to progress with our research, development, manufacturing and regulatory efforts, including our ability to advance and complete our Phase 1/2 SUNRISE clinical trial of LB-001 if and when FDA lifts the clinical hold;

 

the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;

 

the cost of defending potential intellectual property disputes, including patent infringement actions;

 

the achievement of milestones or occurrence of other developments that trigger payments under any of our current agreements or other agreements we may enter into;

 

the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial and other research and development costs under future collaboration agreements, if any;

 

the effect of competing technological and market developments;

 

the cost and timing of completion of process and analytical development and manufacturing activities;

 

the extent to which we engage in transactions, including collaboration, merger, acquisition and licensing transactions;

 

our ability to establish and maintain collaborations on favorable terms, if at all;

 

the cost of establishing sales, marketing and distribution capabilities for LB-001 and any other product candidates in regions where we choose to commercialize our product candidates, if approved;  

 

the initiation, progress, timing and results of our commercialization of LB-001 and any other product candidates, if approved, for commercial sale;

 

our ability to repay outstanding debt; and

 

our ability to attract, hire and retain qualified personnel.

Identifying potential product candidates and conducting preclinical testing, process and analytical development, manufacturing activities and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, even if we successfully identify and develop product candidates and one or more are approved, we may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of medicines that we do not expect to be commercially available for many years, if at all.

 

Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may be required to delay, reduce or eliminate some or all of our research and development programs, preclinical and clinical development programs or future commercialization efforts, or we may be unable to continue operations. Any significant delays in our programs may also require us to reevaluate our corporate strategy, resulting in the expenditure of significant resources and time, or potentially resulting in our discontinuing our operations.

 

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Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

 

To the extent that we raise additional capital through the sale of convertible debt securities or equity, including through our existing at-the-market equity facility, 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 common stockholders. In addition, under U.S. securities laws, a company with a public float of less than $75 million measured at certain time periods may not issue securities under Registration Statements on Form S-3 in excess of one-third of its public float in a 12-month period, which may limit the amount of funds we can raise using Registration Statements on Form S-3. For purposes of the prior sentence, “public float” means the aggregate market value of a company’s common stock held by non-affiliates.

 

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. In addition, debt financing would result in increased fixed payment obligations. For information about our current outstanding debt, see Note 6 in the accompanying notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K and the risk factor titled “The terms of our Loan and Security Agreement place restrictions on our operating and financial flexibility.” If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams 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 product candidates that we would otherwise prefer to develop and market ourselves.

 

We have never generated revenue from product sales and may never be profitable.

 

Our ability to generate revenue from product sales and achieve profitability depends on our ability, alone or with collaborative partners, to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize, product candidates we may identify for development. To date, we have not generated any revenue from product sales and do not anticipate generating revenues from product sales for the foreseeable future. Our ability to generate future revenues from product sales depends heavily on our, or our collaborators’, ability to successfully:

 

 

identify product candidates and complete research and development of any product candidates we may identify;

 

obtain sufficient financial and other resources to complete the LB-001 development program and the development programs of any other product candidate;

 

resolve the clinical hold on our IND of LB-001 in a timely manner and resume our Phase 1/2 SUNRISE clinical trial;

 

obtain data from clinical programs of our product candidates that supports an acceptable risk-benefit profile of each such product candidate in the intended populations, including LB-001 in pediatric patients with MMA;

 

develop safe and effective delivery mechanisms for our genetic medicine product candidates;

 

achieve desirable medicinal properties for the intended indications;

 

seek and obtain regulatory approvals for any product candidate for which we complete clinical trials;

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launch and commercialize any product candidate for which we obtain regulatory approval by establishing a sales force, marketing and distribution infrastructure and/or collaborating with a commercialization partner;

 

qualify for adequate healthcare coverage and reimbursement by government and third-party payors for any product candidate for which we obtain regulatory approval;

 

develop, enhance, scale and validate a manufacturing process and analytical methods for any product candidates we may develop;

 

implement effective strategies and knowledge management systems to ensure the integrity of data, specifically the completeness, consistency and accuracy of data used to ensure the safety, efficacy and quality of products manufactured;

 

establish and maintain supply and manufacturing relationships with third parties that remain compliant with all relevant health authority and legal requirements and can provide adequate, in amount, timing and quality, products and services to support clinical development and the market demand for any product candidate for which we obtain regulatory approval;

 

compete with other therapies and treatment options;

 

obtain market acceptance of any product candidates we may develop as viable treatment options;

 

obtain a continued acceptable safety profile of any approved medicines following approval;

 

address competing technological and market developments;

 

implement internal systems and infrastructure, as needed;

 

enter into collaborations to further the development of any product candidate;

 

negotiate favorable terms in any collaboration, licensing or other arrangements into which we may enter and performing our obligations in such collaborations;

 

maintain, protect and expand our portfolio of intellectual property rights, including patents, trade secrets, know-how and non-patent exclusivity for our medicines;

 

avoid and defend against third-party interference or infringement claims; and

 

attract, hire and retain qualified personnel.

 

Additionally, because our technology involves genome editing and gene therapy we are subject to the following additional challenges and risks with respect to our ability to generate future product revenue, including:

 

 

regulatory requirements that govern gene and cell therapy products, which have changed frequently and may continue to change in the future, and few products that involve the genetic modification of patient cells have been approved in the United States or the European Union, or the EU;  

 

the FDA’s recommendation of a follow-up observation period of up to 15 years or longer for all patients who receive treatment using gene delivery, necessitating us to adopt such an observation period for any product candidate we may develop;

 

gene delivery technologies are novel approaches and may present additional challenges and risks, including obtaining approval from regulatory authorities that have limited experience with the development of such technologies; and

 

reports may arise from preclinical or clinical testing of the gene delivery technologies of our competitors or our product candidates that may raise safety or efficacy concerns about our product candidates.

 

Risks Related to Discovery, Development, Clinical Testing, Manufacturing and Regulatory Approval

 

Our business may be materially adversely affected if the clinical hold placed by the FDA on the LB-001 IND is not timely and favorably resolved or if such regulatory concerns lead to more burdensome preclinical studies or clinical trials that cause significant delays in or end development of LB-001.

 

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As previously disclosed, the FDA placed the IND for our product candidate, LB-001, on clinical hold after we reported an SAE in our Phase 1/2 SUNRISE clinical trial of LB-001 in pediatric MMA patients. For more information on the clinical hold, please see “Item 1. Business—LB-001 for the Treatment of Methylmalonic Acidemia—LB-001 Clinical Development Program.” We are working closely with the FDA and the DSMB to determine the next steps for the SUNRISE trial and the LB-001 program. Until the DSMB approves the protocol and the FDA lifts the clinical hold, we may not continue to enroll any patients in clinical trials of LB-001, including our SUNRISE trial, in the United States and other jurisdictions. There is no guarantee that the FDA will lift the clinical hold or that we will be able to resume development of LB-001 as planned, or at all. Further, even if the FDA lifts the clinical hold, or if the FDA or other regulatory agencies continue to express safety concerns even after the hold is lifted, additional preclinical studies or clinical trials involving LB-001, or amendments to the SUNRISE clinical trial protocol may be needed and difficult to implement and/or complete. If the FDA does not lift the clinical hold or any of the events described in the prior sentence occurs, our progress in the development of LB-001 may be significantly slowed or stopped and the associated costs may be significantly increased, materially adversely affecting our business, and our stock price would likely decline further.

 

In addition, even if the FDA lifts the clinical hold, we may not be able to obtain IRB approvals to continue to enroll the SUNRISE trial as a result of safety events experienced in the SUNRISE trial, or the clinical hold or any related risks, which could further delay our ability to open new trial sites and enroll patients in the SUNRISE trial. In addition, even if the FDA lifts the clinical hold, the announcement of the clinical hold and any perceived risks may affect our ability to enroll patients. Any delay in enrolling patients or inability to continue or complete the SUNRISE trial as a result of safety events experienced in the SUNRISE trial, the clinical hold or otherwise, will delay and could jeopardize our clinical development plans for LB-001, may require us to incur additional clinical development costs and could impair our ability to ultimately obtain FDA approval for LB-001. Delays in the completion of the SUNRISE trial or any future clinical trial of LB-001, or any other product candidate will likely increase our costs, slow down our product candidate development and approval process and could delay or jeopardize our ability to commence product sales and generate revenue. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of LB-001. In addition, if we are unable to resolve the clinical hold favorably or if the FDA or other regulatory agencies continue to express safety concerns, it could adversely affect our ability to develop other product candidates that use our proprietary technology.

 

Our product candidates may cause serious adverse events or undesirable side effects or have other properties that may delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following marketing approval, if any.

 

It is impossible to predict when or if any product candidates we may develop will prove safe in humans. In the genomic medicine field, there have been several significant adverse events from gene therapy treatments in the past, including reported cases of leukemia and death, some of which took years to present. There can be no assurance that our genomic medicine technologies will not cause undesirable side effects. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects, toxicities or unexpected characteristics, including death. A significant risk in many gene editing products is that the edit will be “off-target” (or “on-target,” but unwanted) and cause serious adverse events, undesirable side effects, toxicities or unexpected characteristics. For example, off-target cuts could lead to disruption of a gene or a genetic regulatory sequence at an unintended site in the DNA, or, in those instances where we also provide a segment of DNA to serve as a repair template, it is possible that following off-target cut events, DNA from such repair template could be integrated into the genome at an unintended site, potentially disrupting another important gene or genomic element. While we believe our GeneRide technology obviates this through the use of HR, we cannot be certain that off-target editing will not occur in any of our planned or future clinical trials. There is also the potential risk of delayed adverse events following exposure to gene editing therapy, due to the potential for persistent biological activity of the genetic material or other product components used to carry the genetic material.  In addition, cases of TMA have been previously reported in association with AAV genetic therapies.  As previously disclosed, two patients in our SUNRISE trial experienced TMAs following dosing.  For more information on the cases of TMAs, please see “Item 1. Business—LB-001 for the Treatment of Methylmalonic Acidemia—LB-001 Clinical Development Program.” In addition to SAEs or side effects caused by any product candidate we may develop, the administration process or related procedures also can cause undesirable side effects. If any such events occur, our clinical trials could be suspended or terminated.

 

If SAEs or undesirable side effects arise in the development of any of our product candidates, we, the DSMB, the FDA or other regulatory authorities, or the IRBs at the institutions in which our studies are conducted, could suspend or terminate our clinical trials, the FDA or other regulatory authorities could order us to cease clinical trials, or delay, deny approval of our product candidates for any or all targeted indications, or approve our product candidates with a restrictive label. For example, the FDA placed our LB-001 IND on clinical hold after we reported an SAE in our Phase 1/2 SUNRISE clinical trial of LB-001 in pediatric MMA patients. For more information on the clinical hold, please see “Item 1. Business—LB-001 for the

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Treatment of Methylmalonic Acidemia—LB-001 Clinical Development Program.” SAEs or undesirable side effects that arise in the development of any of our product candidates and any resulting action taken by us, the DSMB, the FDA or other regulatory authorities, or the IRBs, may result in our needing to abandon their development or limit development to certain uses or subpopulations in which the serious adverse events, undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, any of which would harm our business, financial condition, results of operations and prospects. Many product candidates that initially showed promise in early-stage testing have later been found to cause side effects that prevented further clinical development of the product candidates. Moreover, if we elect, or are required, to delay, suspend or terminate any clinical trial of any product candidate we may develop, the commercial prospects of such product candidates may be harmed and our ability to generate product revenues from any of these product candidates may be delayed or eliminated. Treatment-related side effects also could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff. We may have to train medical personnel using our product candidates to understand the side effect profiles for our clinical trials and upon any commercialization of any of our product candidates. Inadequate training in recognizing or managing the potential side effects of our product candidates could result in patient injury or death. Any of these occurrences may harm our ability to identify and develop product candidates, which could harm our business, financial condition and prospects significantly.

 

If any of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by any such product, including during any long-term follow-up observation period recommended or required for patients who receive treatment using our products, a number of potentially significant negative consequences could result, including:

 

regulatory authorities may withdraw approvals of such product;

 

we may be required to recall a product or change the way such product is administered to patients;

 

additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product;

 

regulatory authorities may require additional warnings on the label, such as a “black box” warning or contraindication;

 

if we successfully develop a product candidate and it receives marketing approval, the FDA could require us to implement a REMS, which may include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan to health care practitioners, extensive patient monitoring or distribution systems and processes that are highly controlled, restrictive and more costly than what is typical for the industry;  

 

the product could become less competitive;

 

we could be sued and held liable for harm caused to patients; and

 

our reputation may suffer.

 

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, which could harm our business, financial condition, results of operations and prospects.

 

We intend to identify and develop product candidates based on our novel GeneRide and sAAVy technology platforms, which makes it difficult to predict the time and cost of product candidate development.

 

We have concentrated our research and development efforts on product candidates utilizing our GeneRide and sAAVy technology platforms. Our future success depends on the successful development of these novel therapeutic approaches. Any product candidates we may develop will act at the level of DNA, and, because non-human animal DNA differs from human DNA, results of tests of our product candidates in preclinical animal models for either safety or efficacy may not be predictive of results that may be observed in humans. Also, preclinical animal models may not exist for some of the diseases we expect to pursue. Our GeneRide genome editing technology harnesses HR a naturally occurring DNA repair process. The mechanism of action of this technology is still not completely understood. Therefore, it is and will be difficult for us to predict whether any of our product candidates will be able to successfully and consistently integrate corrective DNA in or deliver gene transfer constructs to enough tissue cells or otherwise result in sufficient expression of the target protein to reach therapeutic levels. We cannot be certain that any of our product candidates will be able to meet safety and efficacy levels needed to be therapeutic in humans or that they will not cause SAEs, such as the SAEs referenced in the prior risk factor, or toxicities. As a result of these factors, it is difficult for us to predict the time and cost of product candidate development, and we cannot predict whether the application of our GeneRide or sAAVy technology platforms, or any similar or competitive gene delivery platforms, will result in the identification, development and regulatory approval of any medicines, or that other

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genetic medicine technologies will not be considered better or more attractive for the development of medicines. Any development problems we experience in the future related to our GeneRide or sAAVy technology platforms or any of our research programs may cause significant delays or unanticipated costs, or we may not be able to solve for the issue. We may also experience delays in developing a capable and scalable manufacturing process or transferring that process to collaboration partners. Any of these factors may prevent us from completing our preclinical studies or clinical trials that we may initiate or prevent us from commercializing any product candidates we may develop on a timely or profitable basis, if at all.

 

Because gene delivery is novel and the regulatory landscape that governs any product candidates we may develop is uncertain and may change, we cannot predict the time and cost of obtaining regulatory approval, if we receive it at all, for any product candidates we may develop.

 

Because gene delivery is novel, the regulatory requirements governing any gene delivery product candidates we develop are uncertain and subject to change. For example, in January 2020, the FDA issued guidance documents to reflect recent advances in the field, and to set forth the framework for the development, review and approval of gene therapies. These guidance documents pertain to the development of gene therapies for the treatment of specific disease categories, including rare diseases, and to manufacturing and long-term follow-up issues relevant to gene therapy, among other topics. The FDA also issued a guidance document in January 2021 addressing manufacturing considerations for licensed and investigational gene therapy products during the COVID-19 pandemic. Moreover, there is substantial, and sometimes uncoordinated, overlap in those responsible for global regulation of existing gene therapy products and cell therapy products. For example, in the United States, the FDA has established the Office of Tissues and Advanced Therapies within its Center for Biologics Evaluation and Research, or CBER, to consolidate the review of genome editing, gene therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review. Genome editing and gene therapy clinical trials are also subject to review and oversight by an institutional biosafety committee, or IBC, a local institutional committee that reviews and oversees basic and clinical research conducted at the institution participating in the clinical trial. Although the FDA decides whether individual genome editing or gene therapy protocols may proceed, the review process and determinations of other reviewing bodies can impede or delay the initiation of a clinical trial, even if the FDA has reviewed the trial and approved its initiation. The same applies to regulatory bodies in other jurisdictions, including Saudi Arabia, where we may enroll patients in our Phase 1/2 SUNRISE clinical trial, and the European Union. The EMA’s Committee for Advanced Therapies, or CAT, is responsible for assessing the quality, safety and efficacy of advanced-therapy medicinal products. The role of the CAT is to prepare a draft opinion on an application for marketing authorization for a gene therapy medicinal candidate that is submitted to the EMA. In the European Union, the development and evaluation of a gene therapy medicinal product must be considered in the context of the relevant European Union guidelines. The EMA may issue new guidelines concerning the development and marketing authorization for gene therapy medicinal products and require that we comply with these new guidelines.

 

Adverse developments in preclinical studies or clinical trials conducted by others in the field of gene therapy products, cell therapy products or products developed through the application of gene editing technology may cause the FDA, the EMA and other regulatory bodies to revise the requirements for approval of any product candidates we may develop or limit the use of products utilizing genome editing technologies, either of which could materially harm our business. In addition, the clinical trial requirements of the FDA, the EMA and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential products.

 

The regulatory approval process for product candidates such as ours can be more expensive and take longer than for other, better known or more extensively studied pharmaceutical or other product candidates. Furthermore, during the regulatory review process, we will need to identify success criteria and endpoints such that the FDA, the EMA or other regulatory authorities will be able to determine the clinical efficacy and safety profile of any product candidates we may develop. As we are initially seeking to identify and develop product candidates to treat diseases in which there is little clinical experience using new technologies, there is heightened risk that the FDA, the EMA or other regulatory authorities may not consider the clinical trial endpoints that we propose to provide clinically meaningful results (reflecting a tangible benefit to patients). In addition, the resulting clinical data and results may be difficult to analyze. Even if the FDA does find our success criteria to be sufficiently validated and clinically meaningful, we may not achieve the pre-specified endpoints to a degree of statistical significance. This may be a particularly significant risk for many of the genetically defined diseases for which we plan to develop product candidates because many of these diseases have small patient populations, and designing and executing a rigorous clinical trial with appropriate statistical power is more difficult than with diseases that have larger patient populations. Further, even if we do achieve the pre-specified criteria, we may produce results that are unpredictable or inconsistent with the results of the non-primary endpoints or other relevant data. The FDA also weighs the benefits of a product against its risks, and the FDA may view the efficacy results in the context of safety as not being supportive of

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regulatory approval. Other regulatory authorities in the European Union and other countries, such as the CAT, may make similar comments with respect to these endpoints and data. Any product candidates we may develop will be based on a novel technology that makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval. To date, no product that utilizes our GeneRide or sAAVy technology has been approved. There have been a limited number of clinical trials of gene editing and gene therapy technologies, however no genome editing product candidates have been approved and only a few gene therapy products have been approved in the United States and Europe. Our Phase 1/2 SUNRISE clinical trial is the first clinical trial of a product candidate that utilizes our technology.

 

Regulatory agencies administering existing or future regulations or legislation may not allow production and marketing of products utilizing genome editing or gene therapy technology in a timely manner or under technically or commercially feasible conditions. In addition, regulatory action or private litigation could result in expenses, delays or other impediments to our research and development programs or the commercialization of resulting products.

 

The regulatory review committees and advisory groups described above and the new guidelines they promulgate may lengthen the regulatory review process, increase the scope of process and analytical development, require us to perform additional preclinical studies or clinical trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of these treatment candidates, or lead to significant post-approval limitations or restrictions. As we advance our research programs and develop future product candidates, we will be required to consult with these regulatory and advisory groups and to comply with applicable guidelines. If we fail to do so, we may be required to delay or discontinue development of any product candidates we identify and develop.

 

We have limited experience conducting clinical trials and no history commercializing genetic medicine product candidates and we may encounter difficulties transitioning from a research-stage to clinical-stage company to ultimately a commercial-stage company, which may make it difficult to evaluate the prospects for our future viability.

 

We were founded in 2014 and began operations in 2015. Our operations to date have been limited to financing and staffing our company, developing our technology such as our GeneRide and sAAVy technology platforms, identifying and developing LB-001 and other product candidates, undertaking preclinical studies, business planning and raising capital. Other than LB-001, all of our programs are still in the preclinical or research stage of development. As described above, our IND for LB-001 was placed on hold by the FDA. We will not be able to progress further with our clinical development of LB-001 in the United States and potentially other jurisdictions until the hold is lifted. For more information, please see the risk factor titled “Our business may be materially adversely affected if the clinical hold placed by the FDA on the LB-001 IND is not timely and favorably resolved or if such regulatory concerns lead to more burdensome preclinical studies or clinical trials that cause significant delays in or end development of LB-001.

 

The risk of failure in the biopharmaceutical industry for programs or product candidates at such stage of development is high. We have not yet demonstrated an ability to successfully complete any interventional clinical trials, including pivotal clinical trials, obtain marketing approval, manufacture a commercial scale product or arrange for a third party to do so on our behalf or conduct sales and marketing activities necessary for successful product commercialization. Typically, it takes about six to ten years to develop a new drug from the time it enters Phase 1 clinical trials to when it is approved for treating patients, but in many cases it may take longer. Consequently, predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing genetic medicine product candidates.

 

In addition, as a business with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors, such as the clinical hold that FDA has placed on our IND for LB-001. We will eventually need to plan to transition from a company with a research and development focus to a company capable of supporting commercial activities, if any of our product candidates is approved. We may not be successful in such a transition.

 

Preclinical drug development is uncertain. Some or all of our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these product candidates on a timely basis or at all, which would have an adverse effect on our business.

 

In order to obtain FDA approval to market a new product, we must demonstrate proof of safety and efficacy in humans. To satisfy these requirements, we will have to conduct adequate and well-controlled clinical trials. Before we can commence clinical trials for a product candidate, we must complete extensive preclinical testing and studies that support our planned IND in the United States. We cannot be certain of the timely completion or outcome of our preclinical testing and studies, and we cannot predict if the FDA will accept our proposed clinical programs, if any, or if the outcome of our preclinical

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testing and studies will ultimately support the further development of any of our product candidates. As a result, we cannot be sure that we will be able to submit INDs or similar applications for any preclinical programs on the timelines we expect, if at all, and we cannot be sure that submission of INDs or similar applications will result in the FDA or other regulatory authorities allowing clinical trials to begin. For example, our IND for LB-001 was placed on clinical hold by the FDA in February 2020 prior to the dosing of the first patient with LB-001, which was lifted in August 2020. More recently, in February 2022, we announced that the FDA had placed our IND for LB-001 on clinical hold after we reported an SAE in our Phase 1/2 SUNRISE clinical trial of LB-001 in pediatric MMA patients.  Even if the FDA lifts the current clinical hold with respect to our LB-001 IND, there can be no assurances that the FDA will not place this IND, or any IND relating to any other of our product candidates that we may file in the future, on clinical hold, requiring us to address any issues raised by the FDA in order to continue the applicable clinical trials.

 

Conducting preclinical testing is a lengthy, time-consuming and expensive process. The length of time may vary substantially according to the type, complexity, novelty and intended use of the product candidate, and often can be several years or more per product candidate. Delays associated with product candidates for which we are conducting preclinical testing and studies ourselves may cause us to incur additional operating expenses. Moreover, we may be affected by delays associated with the preclinical testing and studies of certain product candidates conducted by our current and potential future partners over which we have no control. The commencement and rate of completion of preclinical studies and initiation of clinical trials for a product candidate may be delayed by many factors, including, for example:

 

 

inability to generate sufficient preclinical data to support clinical development;

 

delays in reaching a consensus with regulatory agencies on preclinical and clinical study design;

 

inability to obtain appropriate or sufficient test agents or preclinical animal models in connection with the indication the product candidate is meant to address;

 

recruiting and retaining the appropriate scientific and technical personnel; and

 

the product candidate may not be safe or efficacious for the indication we intend to address.

 

Moreover, even if we obtain positive results from preclinical studies or clinical trials, including interim data from a clinical trial, we may not achieve the same success in ongoing or future trials.

 

Clinical trials are expensive, difficult to design and implement, and involve an uncertain outcome.

 

Before obtaining marketing approval from regulatory authorities for the sale of any product candidates we may identify and develop, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy in humans of any such product candidates. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process, and there is a high failure rate for product candidates proceeding through clinical trials. The results of preclinical studies and clinical trials, including interim data from a clinical trial, of our product candidates may not be predictive of the results of ongoing or future clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biotechnology and genetic medicine industries have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Even if our future clinical trials are completed as planned, we cannot be certain that their results will support the safety and effectiveness of our product candidates for particular indications, including LB-001 for MMA or any other potential indication.

 

Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses. Many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their product candidates.

 

A clinical trial may be suspended or terminated by us, either independently or based on a recommendation by the DSMB, for such trial, by IRBs of the institutions in which such trials are being conducted, or by the FDA or other regulatory authorities. We or such authorities may impose such a suspension or termination due to a number of factors, including (1) failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols; (2) findings from inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities; (3) safety issues or adverse side effects; (4) failure to demonstrate a benefit from using a drug; (5) changes in governmental regulations; (6) administrative actions or lack of adequate funding to continue the clinical trial; or (7) imposition of a clinical hold by the FDA or other regulatory authorities, such as the current clinical hold imposed by FDA on the LB-001 IND after we reported an SAE in our Phase 1/2

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SUNRISE clinical trial of LB-001 in pediatric MMA patients. Furthermore, we may rely on CROs and clinical trial sites to ensure the proper and timely conduct of clinical trials and while we would have agreements governing their committed activities, we would have limited influence over their actual performance, as described in “—Risks Related to Our Dependence on Third Parties.”

 

In addition, LB-001 will require extensive additional clinical testing before we are prepared to submit a Biologic License Application, or BLA, for regulatory approval in the United States or submit a comparable application for regulatory approval in other jurisdictions. We cannot predict with any certainty if or when we might complete the development of LB-001 and submit a BLA for regulatory approval of LB-001 or whether any such BLA will be approved by the FDA or a comparable application for regulatory approval may be approved in other jurisdictions. We may also seek feedback from the FDA or other regulatory authorities on our clinical development program, and the FDA or such regulatory authorities may not provide such feedback on a timely basis, or such feedback may not be favorable, which could further delay our development programs.

 

If we cannot favorably resolve the current clinical hold on our IND for LB-001, or our development program of LB-001 or any other product candidate is delayed, suspended or terminated for another reason, our progress in the development of LB-001 or such other product candidate may be significantly slowed or stopped and the associated costs may be significantly increased, which could materially adversely affect our business.

 

Clinical trials are time-consuming and subject to potential delays.

 

To date, we have not completed any clinical trials for any of our product candidates, including LB-001. We may experience delays in conducting any clinical trials, and we do not know whether planned clinical trials will begin on time, need to be redesigned to address clinical holds imposed by regulatory authorities or for other reasons, recruit and enroll patients on time or be completed on schedule, or at all. For example, as discussed above, our Phase 1/2 SUNRISE clinical trial of LB-001 in pediatric MMA patients has been placed on hold by the FDA. Clinical trials can be delayed or terminated for a variety of reasons, including delays or failures related to:

 

 

the FDA or other regulatory authorities disagreeing as to the design or implementation of our clinical trials, including alignment with regulatory authorities on registrational endpoints for indications where there are not generally accepted registrational endpoints;

 

determining achievable endpoints in connection with our clinical trials that are accepted by the FDA or other regulatory authorities, including with respect to the number of patients and the length of time;

 

obtaining regulatory approval to commence a trial or to restart a trial following a clinical hold, such as the clinical hold placed by FDA on the LB-001 IND after we reported an SAE in our Phase 1/2 SUNRISE clinical trial of LB-001 in pediatric MMA patients;

 

reaching an agreement on acceptable terms with contract manufacturing organizations, or CMOs, for clinical supply, contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CMOs, CROs and trial sites;

 

obtaining IRB approval at each site;

 

regulators, IRBs, DSMBs, safety committees, or ethics committees, may require that we suspend or terminate our clinical trials for various reasons, including noncompliance with regulatory requirements, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using our product candidate, or a finding that the participants are being exposed to unacceptable health risk;

 

recruiting suitable patients to participate in a trial, particularly in light of the COVID-19 pandemic;

 

availability of competing therapies and clinical studies, and clinicians’ and patients’ perceptions as to the potential advantages of the product or product candidate being studied in relation to available therapies or other product candidates in development;

 

developing and validating the companion diagnostic to be used in a clinical trial, if applicable;

 

having patients complete a trial or return for post-treatment follow-up, which could be especially challenging in light of the COVID-19 pandemic;

 

selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data;

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clinical sites deviating from trial protocol or subjects dropping out of a trial;

 

addressing patient safety concerns that arise during the course of a trial;

 

occurrence of SAEs associated with any product candidates we may develop, such as the TMAs experienced by patients in our SUNRISE trial of LB-001 in pediatric MMA patients as further described above, including those that are viewed to outweigh their potential benefits;

 

occurrence of SAEs in trials of the same class of agents conducted by other sponsors;

 

adding a sufficient number of clinical trial sites; or

 

manufacturing sufficient quantities of product candidate for use in clinical trials.

 

We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates or significantly increase the cost of such trials, including:

 

 

we may receive feedback from regulatory authorities that requires us to modify the design of our clinical trials;

 

clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon development programs;

 

difficulty in designing well-controlled clinical trials due to ethical considerations which may render it inappropriate to conduct a trial with a control arm that can be effectively compared to a treatment arm;

 

difficulty in designing clinical trials and selecting endpoints for diseases that have not been well-studied and for which the natural history and course of the disease is poorly understood;

 

the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate and/or participants may drop out of these clinical trials at a higher rate than we anticipate;

 

our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

 

we or any sponsor investigators might have to suspend or terminate clinical trials of our product candidates for various reasons, including non-compliance with regulatory requirements, a finding that our product candidates have undesirable side effects or other unexpected characteristics, or a finding that the participants are being exposed to unacceptable health risks;

 

the cost of clinical trials of our product candidates may be greater than we anticipate, and we may not have funds to cover the costs;

 

the supply or quality of our product candidates or other materials necessary to conduct clinical trials or receive regulatory approval of our product candidates may be insufficient or inadequate;

 

regulators may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate;

 

changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; and

 

any of our collaborators that conduct clinical trials may face any of the above issues, and may conduct clinical trials in ways they view as advantageous to them but that are suboptimal for us.

 

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:

 

 

incur unplanned costs;

 

be delayed in obtaining marketing approval for our product candidates or not obtain marketing approval at all;

 

obtain marketing approval in some countries and not in others;

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obtain marketing approval for indications or patient populations that are not as broad as intended or desired;

 

obtain marketing approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings;

 

be subject to changes in the way the product is administered;

 

be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements;

 

be required to implement a REMS, or create a medication guide outlining the risks of such side effects for distribution to patients;

 

have the product removed from the market after obtaining marketing approval;

 

have regulatory authorities withdraw or suspend their approval of the product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy;

 

be sued; or

 

experience damage to our reputation.

 

If we experience delays in the commencement or completion of our clinical trials, if we cannot favorably resolve the current clinical hold on the LB-001 IND, or if we terminate a clinical trial prior to completion, the commercial prospects of LB-001 or any other product candidate we develop could be harmed. In addition, any delays in our clinical trials could increase our costs, slow down the development and approval process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may harm our business, financial condition and results of operations. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials also ultimately may lead to the denial of regulatory approval of our product candidates.

 

Product development costs also will increase if we or our collaborators experience delays in testing or marketing approvals. We do not know whether any clinical trials will begin as planned, will need to be restructured, or will be completed on schedule, or at all. Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize any product candidates we may develop, could allow our competitors to bring products to market before we do and could impair our ability to successfully commercialize any product candidates we may develop, any of which may harm our business, financial condition, results of operations and prospects.

 

If we encounter difficulties enrolling patients in our clinical trials, particularly in light of the COVID-19 pandemic, our clinical development activities could be delayed or otherwise adversely affected.

 

We or our collaborators may not be able to initiate or continue clinical trials for any product candidates we identify or develop if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or analogous regulatory authorities outside the United States, or as needed to provide appropriate statistical power for a given trial. The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion. In addition, if patients are unwilling to participate in our clinical trials because of negative publicity from adverse events related to the biotechnology, gene therapy or genome editing fields, competitive clinical trials for similar patient populations, clinical trials in competing products or for other reasons, the timeline for recruiting patients, conducting trials and obtaining regulatory approval of any product candidates we may develop may be delayed.

 

We may encounter delays in enrolling, or be unable to enroll, a sufficient number of patients to complete any of our clinical trials, and even once enrolled we may be unable to retain a sufficient number of patients to complete any of our trials. Our ability to enroll patients may be significantly delayed by the evolving COVID-19 pandemic, and we do not know the extent and scope of such delays at this point. The enrollment of patients depends on many factors, including:

 

 

the patient inclusion and exclusion criteria defined in the protocol including exclusion criteria;

 

the size of the patient population required for analysis of the trial’s primary endpoints;

 

severity of the disease under investigation;

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the proximity of patients to trial sites and any barriers on patients' ability to travel (such as travel restrictions patients may encounter due to the COVID-19 pandemic or global conflict);

 

the design of the trial;

 

restrictions on our ability to conduct clinical trials, including full or partial clinical holds on ongoing or planned clinical trials, such as the current clinical hold placed by the FDA on our LB-001 IND;

 

availability and efficacy of approved medications for the disease under investigation;

 

our ability to recruit clinical trial investigators with the appropriate competencies and experience;

 

clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any potentially competitive product candidates being studied in clinical trials and new products that may be approved for the indications we are investigating;

 

our ability to obtain and maintain patient consents;

 

the risk that patients enrolled in clinical trials will drop out of the trials before completion;

 

the risk that the patients we screen may not be eligible to advance to the clinical trial and that the size of the qualifying patient population;

 

perceived risks and benefits of the product candidate under investigation or the method by which such product candidate will be administered to patients, in particular from patients, their caregivers and physicians;

 

perceived risks and benefits of genome editing as a therapeutic approach;

 

perceived risks and benefits of the product candidate based on any interim data or updates that we may announce;

 

efforts to facilitate timely enrollment in clinical trials;

 

patient referral practices of physicians; and

 

ability to monitor patients adequately during and after treatment.

 

In February 2022, we announced that the FDA has placed our IND for LB-001 on clinical hold after we reported an SAE in our Phase 1/2 SUNRISE clinical trial of LB-001 in pediatric MMA patients. If we are unable to satisfy any requests from the FDA in a timely manner, or at all, or if the FDA does not lift the clinical hold in a timely manner, or at all, we would be further delayed in or prevented from enrolling patients in our SUNRISE clinical trial. Even if the FDA lifts the clinical hold, the announcement of the clinical hold may affect enrollment of patients.

 

Our ability to successfully initiate, enroll, and complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:

 

 

difficulty in establishing and managing relationships with CROs and other vendors, as well as clinical trial sites and investigators;

 

different standards for the conduct of clinical trials;

 

different standard-of-care for patients with a particular disease;

 

inability to locate qualified local consultants, physicians and partners;  

 

potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatment; and

 

any heightened restrictions in foreign countries relating to the COVID-19 pandemic (such as travel restrictions).

 

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In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials in such clinical trial sites.

 

Delays or failures in planned patient enrollment or retention may result in increased costs, program delays or both, which could have a harmful effect on our ability to develop LB-001 or any other product candidates, or could render further development impossible.

 

Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize a product candidate we may develop, and any such approval may be for a more narrow indication than we seek.

 

We cannot commercialize a product candidate until the appropriate regulatory authorities have reviewed and approved the product candidate. Even if any product candidates we may develop meet their safety and efficacy endpoints in clinical trials, the regulatory authorities may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval. Additional delays may result if an FDA advisory committee or other regulatory authority recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory authority policy during the period of product development, clinical trials and the review process.

 

Regulatory authorities also may approve a product candidate for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings or a REMS. These regulatory authorities may require precautions or contra-indications with respect to conditions of use, or they may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of any product candidates we may develop. Any of the foregoing scenarios could materially harm the commercial prospects for any product candidates we may develop and materially adversely affect our business, financial condition, results of operations and prospects.

 

Adverse public perception of gene delivery technologies may negatively impact our potential products.

 

We are developing therapies using genome editing and gene therapy technologies. The clinical and commercial success of our potential products will depend in part on public acceptance of the use of genome editing and gene therapy for the prevention or treatment of human diseases. Public attitudes may be influenced by claims that gene editing and gene therapy are unsafe, unethical or immoral, and, consequently, our products may not gain the acceptance of the public or the medical community. Public perception of the cost, durability and potential harm from over-expression of genome editing and gene therapy may also affect public acceptance of our product candidates. Adverse public attitudes may adversely impact our ability to enroll clinical trials. Moreover, our success will depend upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of product candidates we may develop in lieu of, or in addition to, existing treatments with which they are already familiar and for which greater clinical data may be available.

 

In addition, gene editing technology is subject to public debate and heightened regulatory scrutiny due to ethical concerns relating to the application of gene editing technology to human embryos or the human germline. The Alliance for Regenerative Medicine in Washington has issued principles setting forth a bioethical framework for the use of gene editing in therapeutic applications that states that the use of gene editing technologies in research that involved altering human embryos or human germline cells is currently not appropriate. Similarly, the NIH has announced that it would not fund any use of gene editing technologies in human embryos, noting that there are multiple existing legislative and regulatory prohibitions against such work, including the Dickey-Wicker Amendment, which prohibits the use of appropriated funds for the creation of human embryos for research purposes or for research in which human embryos are destroyed. Laws in the United Kingdom prohibit genetically modified embryos from being implanted into women, but embryos can be altered in research labs under license from the Human Fertilisation and Embryology Authority. Research on embryos is more tightly controlled in many other European countries.

 

Although we do not use our technologies to edit human embryos or the human germline, such public debate about the use of gene editing technologies in human embryos and heightened regulatory scrutiny could prevent or delay our development of product candidates. More restrictive government regulations or negative public opinion would have a negative effect on our

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business or financial condition and may delay or impair our development and commercialization of product candidates or demand for any products we may develop.

 

Serious adverse events in our clinical trials, such as the two cases of TMA experienced by two patients in our Phase 1/2 SUNRISE clinical trial described above, or other clinical trials involving gene delivery technology, particularly AAV genetic medicines, such as candidates based on the same capsid serotypes as our product candidates, or occurring during use of our competitors’ products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates. For example, certain gene therapy trials led to several well-publicized adverse events, including cases of leukemia and death, some of which took years to present. Additionally, cases of TMA have been reported in association with other AAV genetic therapies. SAEs, such as these, whether in our clinical trials or other clinical trials involving gene therapy or genome editing products or our competitors’ products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity could result in increased regulation and regulatory scrutiny, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates.

 

We may not be successful in our efforts to identify additional product candidates.

 

Part of our strategy involves identifying novel product candidates. Other than LB-001, all of our product candidates are still in the preclinical or research stage of development. The process by which we identify product candidates may fail to yield product candidates for clinical development for a number of reasons, including:

 

 

we may not be able to generate sufficient preclinical data to support the initiation of clinical trials;

 

we may not be able to assemble sufficient resources to acquire or discover additional product candidates;

 

competitors may develop alternatives that render our potential product candidates obsolete or less attractive;

 

potential product candidates we develop may nevertheless be covered by third parties’ patents or other exclusive rights;

 

potential product candidates may, on further study, be shown to have harmful side effects, toxicities or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance;

 

negative results in the clinical trials for any of our product candidates could negatively impact other product candidates based on the same or similar technologies;

 

potential product candidates may not be effective in or applicable to treating their targeted diseases;

 

the market for a potential product candidate may change so that the continued development of that product candidate is no longer reasonable;

 

a potential product candidate may not be commercially viable;

 

we may experience difficulties reaching a consensus with regulatory agencies on preclinical study design;

 

a potential product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and/or

 

the regulatory pathway for a potential product candidate is too complex and difficult to navigate successfully or economically.

 

In addition, we may choose to focus our efforts and resources on a potential product candidate that ultimately proves to be unsuccessful. As a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other product candidates or other diseases that may later prove to have greater commercial potential or relinquish valuable rights to such product candidates through collaboration, licensing or other royalty arrangements in cases in which it would have been advantageous for us to retain sole development and commercialization rights. If we are unable to identify additional suitable product candidates for clinical development, this could harm our business, financial condition, results of operations and prospects.

 

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We and our contract manufacturers are subject to significant regulation with respect to manufacturing our product candidates. The manufacturing facilities on which we rely may not continue to meet regulatory requirements and have limited capacity.

 

We currently have relationships with a limited number of suppliers for the manufacturing of our product candidates. Each supplier may require licenses to manufacture such components if such processes are not owned by the supplier or in the public domain and we may be unable to transfer or sublicense the intellectual property rights we may have with respect to such activities.

 

All entities involved in the preparation of therapeutics for clinical trials or commercial sale, including our existing contract manufacturers for our product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in clinical trials must be manufactured in accordance with cGMP. These regulations govern manufacturing processes and procedures and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction of adventitious agents or other contaminants, or to inadvertent changes in the properties or stability of our product candidates that can impact safety, efficacy and quality. We or our contract manufacturers must supply all necessary documentation in support of a BLA, or an application for regulatory approval in another jurisdiction, on a timely basis and must adhere to the FDA’s, or the applicable regulatory authority's, GLP, and cGMP regulations enforced by the FDA through its facilities inspection program. None of our contract manufacturers has produced a commercially-approved gene editing product, and some of our contract manufacturers have not produced a commercially-approved gene therapy product and therefore have not yet obtained the requisite FDA approvals to do so. The facilities and quality systems of some or all of our third-party contractors, as well as any facilities and quality systems we may have in the future, must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of our product candidates or any of our other potential products. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or our other potential products or the associated quality systems for compliance with the regulations applicable to the activities being conducted. If these facilities do not pass a pre-approval plant inspection, FDA approval, or approval by regulatory authorities in other jurisdictions, will not be granted.

The regulatory authorities also may, at any time following approval of a product for sale, audit our manufacturing facilities or those of our third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time-consuming for us or a third party to implement and that may include the temporary or permanent suspension of a clinical trial or the temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business.

 

If we or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or regulatory authorities in other jurisdictions can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product or biologic product, or revocation of a pre-existing approval. As a result, our business, financial condition and results of operations may be materially harmed.

 

Additionally, if supply from one approved manufacturer is interrupted, there could be a significant disruption in commercial supply. In the United States, an alternative manufacturer would need to be qualified through a BLA supplement which could result in further delay, and there may be similar requirements in other jurisdictions. The regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.

 

These factors could cause the delay of clinical trials, regulatory submissions, required approvals or commercialization of our product candidates, cause us to incur higher costs and prevent us from commercializing our products successfully. Furthermore, if our suppliers fail to meet contractual requirements, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical trials may be delayed or we could lose potential revenue.

 

The regulatory approval processes of the FDA, the EMA and other regulatory authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.

 

The time required to obtain approval by the FDA, the EMA and other regulatory authorities is unpredictable, but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the type, complexity and novelty of the product candidates involved and the substantial discretion of the regulatory authorities. In

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addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. We have not obtained regulatory approval for any product candidate and it is possible that neither LB-001 nor any other product candidate will ever obtain regulatory approval. Neither we nor any future collaborator is permitted to market any of our product candidates in the United States, the EU or any other jurisdiction until we receive regulatory approval from the applicable regulatory authority. It is possible that the FDA, the EMA or other regulatory authorities may refuse to accept for substantive review any applications for marketing approval that we submit for our product candidates or may conclude after review of our data that our application is insufficient to obtain marketing approval of our product candidates.

 

Prior to obtaining approval to commercialize a product candidate in the United States or abroad, we or our collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA, the EMA or other regulatory authorities, that such product candidates are safe and effective for their intended uses. The FDA, the EMA and other regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical, clinical or other studies. Results from preclinical studies and clinical trials can be interpreted in different ways. Even if we believe the preclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA, the EMA and other regulatory authorities. The FDA, the EMA or other regulatory authorities may also require us to conduct additional preclinical studies or clinical trials for our product candidates either prior to or post-approval, or it may object to elements of our clinical development program. Depending on the extent of these or any other studies required by regulatory authorities, approval of any marketing application that we submit may be delayed by several years, or may require us to expend significantly more resources than we have available.

 

Of the large number of potential products in development, only a small percentage successfully completes the FDA, the EMA or regulatory approval processes in other jurisdictions and are commercialized. The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm our business, results of operations and prospects.

 

We are heavily dependent on the success of LB-001, our lead product candidate, and if LB-001 does not receive regulatory approval in the United States or other jurisdictions, or is not successfully commercialized, our business will be harmed.

 

To date, we have invested a significant portion of our efforts and financial resources in the development of LB-001. Our future success and ability to generate product revenue is substantially dependent on our ability to successfully develop, obtain regulatory approval for and successfully commercialize LB-001. As we announced in February 2022, the FDA placed our IND for LB-001 on clinical hold after we reported an SAE in our Phase 1/2 SUNRISE clinical trial of LB-001 for pediatric MMA patients. We currently have no products that are approved for commercial sale and may never be able to develop marketable products.

 

Assuming favorable resolution of the clinical hold, we expect that a substantial portion of our efforts and expenditures over the next few years will be devoted to LB-001. Accordingly, our business currently depends heavily on the successful development, regulatory approval and commercialization of LB-001, which may never occur. We cannot be certain that LB-001 will be successful in clinical trials, receive regulatory approval or be successfully commercialized even if we receive regulatory approval. Even if we receive approval to market LB-001 from the FDA or other regulatory authorities, we cannot be certain that our product candidate will be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives. Additionally, the research, testing, manufacturing, labeling, approval, sale, marketing and distribution of genetic medicine products are and will remain subject to extensive regulation by the FDA, the EMA and regulatory authorities in other jurisdictions. We are not permitted to market LB-001 in the United States until it receives approval of a BLA from the FDA, or in any foreign jurisdictions until it receives the requisite approval from such jurisdictions. We have not submitted a BLA to the FDA or comparable applications to other regulatory authorities and do not expect to be in a position to do so for the foreseeable future.

 

LB-001 is our lead product candidate, and because other product candidate may be based on similar technology, if LB-001 shows unexpected adverse events or a lack of efficacy in the indications we intend to treat, or if we experience other regulatory or developmental issues, our development plans and business could be significantly harmed. Further, competitors may be developing products with similar technology and may experience problems with their products that could identify problems that would potentially harm our business. For example, as previously disclosed, two patients in our Phase 1/2 SUNRISE clinical trial of LB-001 in pediatric patients experienced cases of TMA. After reporting the second case of TMA to the FDA, the FDA placed our IND for LB-001 on clinical hold. We are working with the FDA and DSMB to determine the next steps for the SUNRISE clinical trial and the LB-001 program.

 

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In order to market any products in any particular jurisdiction, we must establish and comply with numerous and varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA in the United States does not ensure approval by regulatory authorities in other countries or jurisdictions. However, the failure to obtain approval in one jurisdiction may negatively impact our ability to obtain approval elsewhere. In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country.

 

Approval processes vary among jurisdictions and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and increased costs for us and require additional preclinical studies or clinical trials which could be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in those countries. We do not have any product candidates approved for sale in any jurisdiction, including in international markets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of any product we develop will be unrealized.

 

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

 

Because we have limited financial and managerial resources, we focus on research programs and product candidates that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to timely capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. Any such event could harm our business, financial condition, results of operations and prospects.

 

Genomic medicines are novel, and any product candidates we develop may be complex and difficult to manufacture. We could experience production problems that result in delays in our development or commercialization programs, limit the supply of our products or otherwise harm our business.

 

Due to the novel nature of our platform, any product candidates we may develop will likely require processing and manufacturing steps that are more complex than those required for most chemical pharmaceuticals. Moreover, unlike chemical pharmaceuticals, the physical and chemical properties of a biologic such as the product candidates we are developing generally cannot be fully characterized. As a result, assays of the finished product may not be sufficient to ensure that the product will perform in the intended manner.

 

Problems with the manufacturing process, even minor deviations from the normal process, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient inventory. If we successfully develop product candidates, we may encounter problems achieving adequate quantities and quality of clinical-grade materials that meet FDA, EMA or other comparable applicable foreign standards or specifications with consistent and acceptable production yields and costs.

 

In addition, the FDA, the EMA and other regulatory authorities may require us to submit samples of any lot of any approved product together with the protocols showing the results of applicable tests at any time. Under some circumstances, the FDA, the EMA or other regulatory authorities may require that we not distribute a lot until the agency authorizes its release. Slight unplanned deviations in the manufacturing process, including those affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls. Lot failures or product recalls could cause us to delay clinical trials or product launches, which could be costly to us and otherwise harm our business, financial condition, results of operations and prospects.

 

We or our third-party contractors also may encounter problems hiring and retaining the experienced scientific, quality control and manufacturing personnel needed to manage and/or provide the necessary oversight of our manufacturing process, which could result in delays in our production or difficulties in maintaining compliance with applicable regulatory requirements.

Given the nature of biologics manufacturing, there is a risk of contamination during manufacturing. Any contamination could materially harm our ability to produce product candidates on schedule and could harm our results of operations and cause

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reputational damage. Some of the raw materials that we anticipate will be required in our manufacturing process are derived from biologic sources. Such raw materials are difficult to procure and may be subject to contamination or recall. A material shortage, contamination, recall or restriction on the use of biologically derived substances in the manufacture of any product candidates we may develop could adversely impact or disrupt the commercial manufacturing or the production of clinical material, which could materially harm our development timelines and our business, financial condition, results of operations and prospects.

 

Any problems in our manufacturing process or the facilities with which we contract could make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development programs. Problems in third-party manufacturing process or facilities also could restrict our ability to meet market demand for any products we develop and commercialize.

 

The manufacturing processes for our product candidates are complex and changes in our manufacturing processes may cause delays in our clinical development and commercialization plans.

 

The manufacturing processes for our product candidates, including viral vector manufacturing, are complex. Some of the factors that contribute to the complexity of this process include:

 

 

the use of complex biological raw materials, including plasmid DNA, and cell banks, that need to comply with stringent regulatory requirements;

 

the use of complex manufacturing methods, such as transfection of suspension mammalian cell culture in large bioreactors (transfection is the process by which plasmid DNA enters the cells), and purification of intact viral particles;

 

the need to produce high-concentration, high purity drug product; and

 

the challenges associated with scale-up, batch-to-batch consistency and product characterization, including measurement of potency and quality.

 

We explore improvements to the manufacturing process for our product candidates on a continual basis. Changes to the manufacturing process may occur in connection with efforts to optimize our process in preparation for the potential advancement of our clinical trial or commercialization of our product candidates. Changes to this process could induce a change in the purity or potency of a product candidate. In some circumstances, changes in the manufacturing process may require us to perform additional comparability studies or to collect additional data from patients prior to undertaking additional clinical studies, or to perform a bridging study.  The FDA could also require us to file a new IND with respect to such changes in our manufacturing process. These requirements may lead to delays in our clinical development and commercialization plans.

 

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Our employees and independent contractors, including investigators, CROs, CMOs, consultants, vendors and any third parties we may engage in connection with development and commercialization, may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could harm our business.

 

Misconduct by our employees and independent contractors, including investigators, CROs or CMOs, consultants, vendors, and any third parties we may engage in connection with development and commercialization, could include intentional, reckless or negligent conduct or unauthorized activities that violate: (i) the laws and regulations of the FDA, EMA rules and regulations and other similar regulatory requirements, including those laws that require the reporting of true, complete and accurate information to such authorities; (ii) GXP; (iii) data privacy, security, fraud and abuse and other healthcare laws and regulations; or (iv) laws that require the reporting of true, complete and accurate financial information and data. Activities subject to these laws could also involve the improper use or misrepresentation of information obtained in the course of clinical trials, creation of fraudulent data in preclinical studies or clinical trials or illegal misappropriation of drug product, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. Additionally, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid, other U.S. federal healthcare programs or healthcare programs in other jurisdictions, individual imprisonment, additional integrity oversight and reporting obligations, other sanctions, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations.

 

Our business and operations would suffer in the event of system failures.

 

Our computer systems, as well as those of our CROs, CMOs, suppliers and other contractors and consultants, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our product candidate development programs. For example, the loss of preclinical study or clinical trial data from completed, ongoing or planned trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of personal, confidential or proprietary information, we could incur liability and the further development of LB-001 or any other product candidate could be delayed.

 

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, clinical trial data, proprietary business information, personal data and personally identifiable information of our clinical trial subjects and employees, in our data centers and on our networks. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our security measures and those of our third-party contractors, our information technology and infrastructure may be vulnerable to attacks by hackers or internal bad actors, or breached due to employee error, a technical vulnerability, malfeasance or other disruptions. Although, to our knowledge, we have not experienced any such material security breach to date, any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, significant regulatory penalties, and such an event could disrupt our operations, damage our reputation, and cause a loss of confidence in us and our ability to conduct clinical trials, which could adversely affect our reputation and delay our clinical development of our product candidates.

 

Interim “top-line” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

 

From time to time, we may publish interim “top-line” or preliminary data from our clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or “top-line” data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects.

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Risks Related to Our Dependence on Third Parties

 

We currently contract with third parties for the manufacture and testing of materials. This reliance on third parties increases the risk that we will not have sufficient quantities of such materials, product candidates or any medicines that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

 

We contract with third parties, including those with manufacturing facilities, to supply some of our discovery and preclinical research. We currently also rely on third-party manufacturers and other vendors for the manufacture and testing of our materials for clinical trials. We expect to continue to do so for commercial supply of any product candidates that we may develop and for which we or our collaborators obtain marketing approval. We do not have a long-term supply agreement with any of the third-party manufacturers, and we purchase our required supply on a purchase order basis.

We may be unable to establish any agreements with third-party manufacturers for clinical and commercial supply manufacturing, or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including such any third-party manufacturer:

 

 

experiencing staffing difficulties;

 

undergoing changes in priorities or becoming financially distressed;

 

forming relationships with other entities, some of which may be our competitors;

 

experiencing unanticipated events that cause negative consequences in such third party's ability to fulfill its obligations to us, including due to the COVID-19 pandemic or natural disasters requiring delay or cessation of operations;

 

experiencing business interruptions resulting from geo-political events, including war and terrorism, or natural disasters, including floods and fires;

 

potential unauthorized disclosure or misappropriation of our intellectual property by CMOs, which may allow our potential competitors to access and exploit our proprietary technology and reduce our trade secret protection;

 

having limited capacity for manufacturing slots;

 

the possible breach of the manufacturing agreement by the third party;

 

the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; and

 

reliance on the third party for regulatory compliance, quality assurance, compliance with specifications, maintaining proper chain of custody, safety, and pharmacovigilance and related reporting.

 

Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements in or outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocations, seizures or recalls of product candidates or medicines, operating restrictions, and criminal prosecutions, any of which could harm our business, financial condition, results of operations and prospects.

Any medicines that we may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.

 

Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. We do not currently have arrangements in place for redundant supply of complex biological raw materials, drug substance or drug product. If any one of our current contract manufacturers cannot perform as agreed, we may be required to replace that manufacturer. Although we believe that there are a few potential alternative manufacturers who could manufacture any product candidates we may develop, we may incur added costs and delays in identifying and qualifying any such replacement.

 

Our current and anticipated future dependence upon others for the manufacture of any product candidates we may develop or medicines may adversely affect our future profit margins and our ability to commercialize any medicines that receive marketing approval on a timely and competitive basis.

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We intend to rely on third parties to conduct, supervise and monitor our clinical trials. If those third parties do not successfully carry out their contractual duties, or if they perform in an unsatisfactory manner, it may harm our business.

 

We currently rely, and expect to continue to rely, on third parties to conduct some aspects of our research and preclinical testing. We currently rely, and expect to continue to rely, on CROs and other vendors, as well as clinical trial sites and investigators to ensure the proper and timely conduct of our clinical trials, and we expect to have limited influence over their actual performance. Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it would delay our product development activities.

 

We intend to rely upon CROs and other vendors to draw, distribute, store and test clinical samples, the data from which will be used to manage ongoing care of participants in our clinical studies and to monitor clinical safety and efficacy endpoints, and to store, manage and analyze clinical data for our programs. We also intend to rely on CROs and other vendors for the execution of future preclinical studies. Our reliance on CROs for clinical development activities limits our control over these activities, but we remain responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities. We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our CROs, distributors and other vendors could delay clinical development or marketing approval of any product candidates we may develop or commercialization of our medicines, producing additional losses and depriving us of potential product revenue.

 

We and our CROs and other vendors will be required to comply with the GLPs and GCPs, which are regulations and guidelines enforced by the FDA and are also required by the Competent Authorities of the Member States of the European Economic Area, or the EEA, and comparable foreign regulatory authorities in the form of International Conference on Harmonization guidelines for any of our product candidates that are in preclinical and clinical development. The regulatory authorities enforce GCPs through periodic inspections of trial sponsors, principal investigators and clinical trial sites. If we or our CROs fail to comply with GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot be sure that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP regulations. In addition, our clinical trials must be conducted with product produced under cGMP regulations. Accordingly, if our CROs fail to comply with these regulations, we may be required to repeat clinical trials, which would delay the regulatory approval process. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database, clinicaltrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity, and civil and criminal sanctions.

 

Our CROs and other vendors are not our employees, and we will not control whether or not they devote sufficient time and resources to our future clinical and preclinical programs. These CROs and other vendors may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials, or other product development activities which could harm our competitive position. We face the risk of potential unauthorized disclosure or misappropriation of our intellectual property by CROs and other vendors, which may reduce our trade secret protection and allow our potential competitors to access and exploit our proprietary technology. If our CROs and other vendors do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize any product candidate that we develop. As a result, our financial results and the commercial prospects for any product candidate that we develop would be harmed, our costs could increase, and our ability to generate revenues could be delayed.

 

If our relationship with any CROs or other vendors terminate, we may not be able to enter into arrangements with alternative CROs or other vendors or do so on commercially reasonable terms. Switching or adding additional CROs or other vendors involves substantial cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though we intend to carefully manage our relationships with our CROs and other vendors, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not harm on our business, financial condition, results of operations and prospects.

 

We have and may in the future enter into collaborations with third parties for the research, development and commercialization of certain of the product candidates we may develop. If any such collaborations are not successful, we may not be able to capitalize on the market potential of those product candidates.

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We may seek collaborative relationships for the development and commercialization of any product candidate we may develop. For example, in January 2020, we announced a research collaboration with Takeda, in April 2021, we entered into an Exclusive Research Collaboration. License and Option Agreement with CANbridge, and in April 2021, we also entered into a research collaboration with Daiichi. Future collaborators could include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. Under any such arrangements with third parties, we will likely have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of any product candidates we may seek to develop with them. Our ability to generate revenues from these arrangements will depend partly on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements. We cannot predict the success of any collaboration that we enter into.

Failure to obtain such collaborative relationships could impair the potential for any product candidate we may develop. We also may enter into collaborative relationships to provide funding to support our other research and development programs. The process of establishing and maintaining collaborative relationships is difficult, time-consuming and involves significant uncertainty, such as:

 

 

a collaboration partner may have significant discretion in determining the efforts and resources that they will apply to these collaborations;

 

a collaboration partner may shift its priorities and resources away from our product candidates due to a change in business strategies, or a merger, acquisition, sale or downsizing;

 

a collaboration partner may delay preclinical studies or clinical trials, provide insufficient funding for a nonclinical program or clinical trial, stop a clinical trial, nonclinical study or abandon a product candidate, repeat or conduct new preclinical studies or clinical trials, or require a new formulation of a product candidate for testing;

 

a collaboration partner may seek to renegotiate or terminate its relationship with us due to unsatisfactory clinical or nonclinical results, manufacturing issues, a change in business strategy, a change of control or other reasons;

 

a collaboration partner may cease development in therapeutic areas that are the subject of our strategic collaboration;

 

a collaboration partner may not devote sufficient capital or resources towards our product candidates;

 

a collaboration partner may change the success criteria for a product candidate thereby delaying or ceasing development of such candidate;

 

a collaboration partner may not properly obtain, maintain, enforce or defend our intellectual property or proprietary rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation;

 

a significant delay in initiation of certain development activities by a collaboration partner will also delay payment of milestones tied to such activities, thereby impacting our ability to fund our own activities;

 

a collaboration partner could develop a product that competes, either directly or indirectly, with our product candidate;

 

a collaboration partner with commercialization obligations may not commit sufficient financial or human resources to the marketing, distribution or sale of a product;

 

a collaboration partner with manufacturing responsibilities may encounter regulatory, resource or quality issues and be unable to meet demand requirements;

 

collaborations involving a co-development relationship increases the risk to successful completion of a development program because it requires coordination between multiple sponsors on a number of topics, including regulatory and development strategy and safety reporting;

 

a collaboration partner may terminate a strategic alliance and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates;

 

a dispute may arise between us and a partner concerning the research, development or commercialization of a product candidate resulting in a delay in milestones, royalty payments or termination of an alliance and possibly resulting in costly litigation or arbitration which may divert management attention and resources;

 

a partner may use our products or technology in such a way as to invite litigation from a third party;

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we may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control;

 

collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner, or at all; and

 

if a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program under such collaboration could be delayed, diminished or terminated.

 

If our collaborations do not result in the successful development and commercialization of products, or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding we expect under these agreements, our development of product candidates could be delayed and we may need additional resources to develop product candidates. In addition, if one of our collaborators terminates its agreement with us, we may find it more difficult to find a suitable replacement collaborator or attract new collaborators, and our development programs may be delayed or the perception of us in the business and financial communities could be adversely affected. All of the risks relating to product development, regulatory approval, and commercialization described herein also apply to the activities of our collaborators.

 

We may in the future decide to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of any product candidates we may develop. These relationships, or those like them, may require us to incur non-recurring and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business. In addition, we could face significant competition in seeking appropriate collaborators, and the negotiation process is time-consuming and complex. Our ability to reach a definitive collaboration agreement will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of several factors. If we license rights to any product candidates we or our collaborators may develop, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture.

If any collaborator fails to fulfill its responsibilities in a timely manner, or at all, our research, clinical development, manufacturing or commercialization efforts related to that collaboration could be delayed or terminated, or it may be necessary for us to assume responsibility for expenses or activities that would otherwise have been the responsibility of our collaborator. If we are unable to successfully transition terminated collaborative agreements, we may have to delay or discontinue further development of one or more of our product candidates, undertake development and commercialization activities at our own expense or find alternative sources of capital. Moreover, any collaborative partners we enter into agreements with in the future may shift their priorities and resources away from our product candidates or seek to renegotiate or terminate their relationships with us.

 

If conflicts arise between us and our collaborators or strategic partners, these parties may act in a manner adverse to us and could limit our ability to implement our strategies.

 

If conflicts arise between our collaborators or strategic partners, such as CANbridge, Daiichi, Stanford, NIH, CMRI, the University of Texas or Oregon Health & Science University, or OHSU, and us, the other party may act in a manner adverse to us and could limit our ability to implement our strategies. Some of our collaborators and strategic partners are conducting multiple product development efforts within each area that is the subject of the collaboration with us. Our collaborators or strategic partners, however, may develop, either alone or with others, products in related fields that are competitive with the products or potential products that are the subject of these collaborations. Competing products, either developed by the collaborators or strategic partners or to which the collaborators or strategic partners have rights, may result in the withdrawal of partner support for our product candidates.

 

Some of our collaborators or strategic partners could also become our competitors in the future. Our collaborators or strategic partners could develop competing products, preclude us from entering into collaborations with their competitors, fail to obtain timely regulatory approvals, terminate their agreements with us prematurely, or fail to devote sufficient resources to the development and commercialization of products. Any of these developments could harm our product development efforts.

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Our collaborators or strategic partners may decide to adopt alternative technologies or may be unable to develop commercially viable products with our technology, which would negatively impact our revenues and our strategy to develop these products.

 

Our collaborators or strategic partners may adopt alternative technologies, which could decrease the marketability of our GeneRide or sAAVy technologies. Additionally, because our current or future collaborators or strategic partners are likely to be working on more than one development project, they could choose to shift their resources to projects other than those they are working on with us. If they do so, this would delay our ability to test our technology and would delay or terminate the development of potential products based on our GeneRide or sAAVy technologies. Further, our collaborators and strategic partners may elect not to develop products arising out of our collaborative and strategic partnering arrangements or to devote sufficient resources to the development, manufacturing, marketing or sale of these products. The failure to develop and commercialize a product candidate pursuant to our agreements with our current or future collaborators would prevent us from receiving future milestone and royalty payments which would negatively impact our revenues.

 

If we fail to comply with obligations in agreements under which we in-license or acquire development or commercialization rights to products, technology or data from third parties, including our agreements with Stanford, the University of Texas and NIH, we could lose such rights that are important to our business, and we may be unable to continue our development or commercialization programs as a result, which would be harmful to our business.

 

We are a party to agreements with Stanford and the University of Texas to license our core technology, and we are party to a license agreement with the NIH for development and commercialization rights to certain capsids including the transgene for LB-001. We are also party to an agreement with CMRI for development and commercialization rights to certain capsids including the first capsid produced from the sAAVy platform, sL65. We may enter into additional agreements with other parties in the future that impose diligence, development and commercialization timelines, milestone payments, royalties, insurance and other obligations on us.

 

In exchange for the rights granted to us pursuant to our agreements with Stanford, the University of Texas, the NIH and CMRI, we are obligated to make payments upon the achievement of certain milestone events and to pay annual maintenance fees and specified royalties. If we fail to comply with our obligations under these agreements or any future license agreements, our counterparties may have the right to terminate these agreements, in which event we might not be able to develop, manufacture or market any product candidate that is covered by these agreements, which could materially adversely affect the value of the product candidate being developed under any such agreement. Termination of these agreements or reduction or elimination of our rights under these agreements may result in our having to negotiate new or reinstated agreements with less favorable terms, or cause us to lose our rights under these agreements, including our rights to important intellectual property or technology.

 

Our business has been adversely affected by the ongoing coronavirus pandemic, and we expect it to continue to have a negative impact on our business.

 

In March 2020, the World Health Organization characterized the COVID-19 outbreak a “pandemic.” The pandemic and government measures taken in response have since had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. Although the FDA has approved certain therapies and vaccines, the logistics of implementing a national vaccine program, the willingness of individuals to get vaccinated and the overall efficacy of the vaccines once widely administered, especially as new strains of COVID-19 have been discovered, and the level of resistance these new strains have to the existing vaccines remains unknown.  

 

The Company is following federal, state and local requirements and guidelines with respect to COVID-19 and has allowed its employees to return to working on-premises in accordance with those requirements and guidelines.

 

Our research, development and manufacturing activities are dependent on our ability to continue our work on premises at our laboratory. We also rely on third parties, such as CROs and CMOs, located in areas that are affected by the COVID-19 pandemic for certain research, development and manufacturing activities. Many of these third parties also limited their staff from working on premises as part of their response to the COVID-19 pandemic. The COVID-19 pandemic may have a significant negative effect on our business and future results due to a variety of factors, including the health