PRECISION BIOSCIENCES INC
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
DTIL$10.60+7.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-13.
0000950170-24-058192
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0000950170-24-088951
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 160 previous paragraphs and 147 current paragraphs.
87 unchanged; 38 reworded; 14 added; 33 removed; 2 previous and 8 current paragraphs rearranged.
Tables are not compared: 3 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
On April 11, 2024, the Company received written notice from Prevail Therapeutics, Inc. ("Prevail"), a wholly-owned subsidiary of Eli Lilly and Company, of its termination of the amended and restated development and license agreement between the Company and Prevail (the "Prevail Agreement"). Prevail’s notice informed the Company that Prevail was exercising its right pursuant to Section 15.3.2 of the Prevail Agreement to terminate the Prevail Agreement in its entirety without cause upon 90 days’ prior written notice to the Company. The Company subsequently exercised its rights to the return of the three programs. We are continuing to evaluate these returned programs to determine the appropriate next steps with each of them, including a novel gene excision approach for treatment of Duchenne Muscular Dystrophy (“DMD”), a liver target for gene insertion, and a gene editing program targeting neurons to address a disease of the central nervous system.
Current report
Our gene editing program PBGENE-HBV, for the potential treatment of chronic hepatitis B virus (“HBV”), remains a top priority, and we expect to submit an investigational new drug (“IND”) application or clinical trial application (“CTA”) later this year. In February 2024, we announced that we had received pre-IND regulatory feedback from the U.S. Food and Drug Administration (“FDA”) in addition to regulatory feedback from agencies outside the U.S., providing clarity and alignment on IND/CTA-enabling preclinical plans and clinical strategy. The program is advancing through final toxicology studies and drug for the planned Phase 1 clinical trial has been manufactured. We plan to provide an additional program update later this year.
Current report
General and administrative expenses were $8.5 million for the three months ended June 30, 2024 compared to $9.8 million for the three months ended June 30, 2023. The decrease of $1.3 million was primarily due to a $0.9 million decrease in employee-related costs and share based compensation expense as a result of reduced headcount in addition to a decrease in insurance expense and legal fees.
Current report
Loss from Equity Method Investment
Current report
Gain on Changes in Fair Value
Current report
Comparison of the Six Months Ended June 30, 2024 and June 30, 2023
Current report
Revenue
Current report
Revenue for the six months ended June 30, 2024 was $67.5 million, compared to $28.6 million for the six months ended June 30, 2023. The increase of $38.9 million in revenue during the six months ended June 30, 2023 was primarily the result of a $34.8 million increase in revenue related to the Prevail Agreement as the remaining revenue under the agreement was recognized during the six months ended June 30, 2024 due to the termination of the agreement. Additionally, there was a $9.5 million increase in revenue in the six months ended June 30, 2024 as a result of the TG License Agreement and the license agreement with Caribou. Partially offsetting the increase was a $5.3 million decrease in revenue recognized under the Novartis Agreement during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current report
Gain (Loss) on Changes in Fair Value
Current report
Interest expense was $1.1 million for the six months ended June 30, 2024 and 2023.
Current report
Interest income was $3.5 million during the six months ended June 30, 2024 compared to $4.0 million during the six months ended June 30, 2023. The $0.5 million decrease in interest income was the result of a lower cash balance during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.
Current report
Loss on disposal of assets was $0.3 million during the six months ended June 30, 2024 compared to a gain of less than $0.1 million during the six months ended June 30, 2023.
Current report
Cash used in operating activities during the six months ended June 30, 2024 was $33.9 million compared to $52.6 million during the six months ended June 30, 2023. The $18.7 million decrease in cash used in operating activities was primarily due to a $33.0 million change in operating assets and liabilities primarily due to the reduction in our historical cell therapy operations as well as deferred revenue. Further, there was also a $26.5 million change in non-cash items primarily due to the change in the valuation of the warrants and equity method investment. The remaining change is attributable is net income reported in the period.
Current report
On July 31, 2024, we replaced the Revolving Line with the 2024 Term Loan with an aggregate principal amount of $22.5 million. The stated interest rate under the 2024 Term Loan is equal to the greater of 1.50% below the Prime Rate or 4.5%. As of July 31, 2024, the stated interest rate was 7.00%.
Removed paragraphs (33)
Previous report
Also in September 2023, we received a Notice of Allowance from the U.S. Patent and Trademark Office (“USPTO”) for U.S. Patent Application No. 18/161,560, titled “Engineered Meganucleases That Target Human Mitochondrial Genomes.” The allowed patent includes composition of matter claims encompassing a mitochondria-targeted ARCUS nuclease (“mitoARCUS”) that is designed to specifically target, cleave, and eliminate mutant mitochondrial DNA comprising an m.3243A>G mutation.
Previous report
In April 2024, we exercised our rights to the return of three programs with the conclusion of the amended and restated development and license agreement (the “Prevail Agreement”) with Prevail Therapeutics, Inc. (“Prevail”), a wholly-owned subsidiary of Eli Lilly and Company. Pursuant to the terms of the Prevail Agreement, we and Prevail collaborated to develop our ARCUS nucleases for the research and development of potentialin vivo therapies for genetic disorders, including Duchenne muscular dystrophy (“DMD”) and two additional gene targets. Previously, we highlighted preclinical data demonstrating the potential of ARCUSin vivo gene editing for large gene excisions and that the edited dystrophin variant was observed in multiple tissue types frequently involved in progression of DMD, including skeletal muscle, heart, and diaphragm, thereby enabling significantly improved muscle function. We also shared data for another Prevail program highlighting high efficiency gene insertion in adult non-human primates (“NHPs”). We presented two poster presentations at the European Society of Gene & Cell Therapy congress in October 2023,“Unique features of ARCUS nucleases enable high efficiency, targeted gene insertion in vivo” and“ARCUS-mediated excision of the “hot spot” region of the human dystrophin gene results in functional improvement in a mouse model of“DMD”.
Previous report
Following the reverse stock split and common stock offering, we had 6,916,239 shares outstanding as of March 31, 2024.
Previous report
License and Collaboration Transactions
Previous report
Under the TG License Agreement, we are entitled to receive an upfront cash payment of $10.0 million (the “Upfront Payment”), an additional cash payment of $7.5 million in the event that TG Therapeutics achieves a certain clinical milestone that is expected to be achieved in the near-term (the “Initial Milestone Payment”), and additional payments upon the achievement of additional specified milestones of up to $288.6 million (the “Additional Milestone Payments”). As described below, up to $10.0 million of the cash payments potentially payable us are payable in exchange for the issuance (the “Company Stock Issuances”) to TG Subsidiary of shares of our common stock.
Previous report
The Upfront Payment of $10.0 million is comprised of (i) a $5.25 million cash payment that was paid to us on February 5, 2024, (ii) a $2.25 million cash payment that was paid to us on February 5, 2024 in exchange for 97,360 shares of our common stock, based on a price per share equal to a 100% premium to the VWAP of our common stock for the 30 trading days prior to the date of the TG License Agreement, and (iii) a deferred cash payment of $2.5 million due within 12 months following the date of the TG License Agreement, payable in exchange for such number of shares of our common stock determined based on a price per share equal to the greater of (A) a 100% premium to the VWAP of our common stock for the 30 trading days prior to the date of payment or (B) a minimum price of $11.1660 determined in accordance with Nasdaq Listing Rule 5635(d) (the “Minimum Price”).
Previous report
The Initial Milestone Payment of $7.5 million, if payable, will consist of (i) a $5.25 million cash milestone payment and (ii) a $2.25 million cash payment payable in exchange for such number of shares of our common stock determined based on a price per share equal to the greater of (A) a 100% premium to the VWAP of our common stock for the 30 trading days prior to the achievement of such milestone or (B) the Minimum Price.
Previous report
The Additional Milestone Payments become due upon the achievement of certain milestones as specified in the TG License Agreement. Included within the Additional Milestone Payments is a potential payment of $3.0 million in connection with achievement of a milestone specified in the TG License Agreement, payable in exchange for such number of shares of our common stock determined based on a price per share equal to the greater of (A) a 100% premium to the VWAP of our common stock for the 30 trading days prior to the achievement of such milestone or (B) the Minimum Price.
Previous report
Subject to the terms and conditions of the TG License Agreement, TG Therapeutics is permitted to pay up to 50% of the value of each Additional Milestone Payment (other than the Additional Milestone Payment described above that would, upon achievement, involve the issuance of $3.0 million of shares of our common stock) in freely tradable shares of common stock of TG Parent, valued based on the VWAP of the TG Parent shares of common stock on Nasdaq for the 30 trading days prior to the achievement of the applicable milestone.
Previous report
If a licensed product under the TG License Agreement is approved and sold, TG Therapeutics is also required to pay us tiered royalties ranging from high-single-digit to low-double-digit percentages on net sales of the licensed product. TG Therapeutics’ obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of (i) the expiration of the last-to-expire valid claim in such country covering such licensed product; (ii) the expiration of any period of data, regulatory, or market exclusivity, or supplemental protection certificates (other than patents) covering the licensed product in such country; and (iii) a period of ten years following the first commercial sale of the respective licensed product in such country.
Previous report
Unless earlier terminated, the TG License Agreement will remain in effect on a licensed product-by-licensed product and country-by-country basis until the expiration of a defined royalty term for each licensed product and country. We may terminate the TG License Agreement if TG Therapeutics fails to initiate certain development activities with respect to the licensed product by a specified date or ceases active development of the licensed product for a specified period of time. In addition, we may terminate the TG License Agreement if TG Therapeutics or any of its affiliates or sublicensees challenges the validity of any patents controlled by us. We or TG Therapeutics may terminate the TG License Agreement (i) for material breach by the other party and a failure to cure such breach within the time period specified in the TG License Agreement or (ii) due to the other party’s insolvency.
Previous report
On June 14, 2022, we entered into the Novartis Agreement, which became effective on June 15, 2022 (the “Novartis Effective Date”), to collaborate to discover and developin vivo gene editing products incorporating our custom ARCUS nucleases for the purpose of seeking to research and develop potential treatments for certain diseases (collectively referred to as licensed products). Any initial licensed products under the Novartis Agreement will be developed for the potential treatment of certain hemoglobinopathies, including sickle cell disease and beta thalassemia.
Previous report
Pursuant to the terms of the Novartis Agreement, we will develop an ARCUS nuclease and conductin vitro characterization for the licensed products, with Novartis then assuming responsibility for all subsequent development, manufacturing and commercialization activities. Novartis will receive an exclusive license for and be required to use commercially reasonable efforts to conduct all subsequent research, development, manufacture and commercialization activities with respect to the licensed products. We will initially develop a single, custom ARCUS nuclease for a defined “safe harbor” target site for insertion of specified therapeutic payloads in a patient’s genome (the “Initial Nuclease”) for Novartis to further develop as a potentialin vivo treatment option for certain hemoglobinopathies, including sickle cell disease and beta thalassemia. Pursuant to the terms of the Novartis Agreement, Novartis may elect, subject to payment of a fee to us, to replace licensed products based on the Initial Nuclease with licensed products based on a second custom ARCUS nuclease we design for gene editing of a specified human gene target associated with hemoglobinopathies (the “Replacement Nuclease”). Additionally, Novartis has the option, upon payment of a fee to us for each exercise of the option, to include licensed products utilizing the Initial Nuclease for insertion of up to three additional specified therapeutic payloads at the “safe harbor” target site, each intended to treat a particular genetic disease. The exercise period for such option ends on the earlier of (a) the fourth anniversary of the Novartis Effective Date and (b) the replacement of the Initial Nuclease with the Replacement Nuclease as described above.
Previous report
In July 2022, we received a $50.0 million upfront cash payment under the Novartis Agreement. Additionally, on the Novartis Effective Date, Novartis made an equity investment in our common stock pursuant to a stock purchase agreement (the “Novartis Stock Purchase Agreement”) pursuant to which, on the Novartis Effective Date, we issued and sold to Novartis 413,581 shares of our common stock (the “Novartis Shares”) in a private placement transaction for an aggregate purchase price of $25.0 million, or approximately $60.30 per share. The price per share of our common stock under the Novartis Stock Purchase Agreement represented a 20% premium over the volume-weighted-average-price of our common stock over the 10 trading days preceding the execution date of the Novartis Stock Purchase Agreement.
Previous report
Pursuant to the Novartis Stock Purchase Agreement, subject to certain exceptions, Novartis may not sell the Novartis Shares without our approval for a period of two years following the Novartis Effective Date. In addition, for a period of two years following the Novartis Effective Date, Novartis and its affiliates may not (a) effect or otherwise participate in, directly or indirectly, any acquisition of any of our securities or material assets, any tender offer or exchange offer, merger or other business combination or change of control involving us, any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to us, or any solicitation of proxies or consents to vote any of our securities or (b) act with any other person, or publicly disclose any intention, to do any of the foregoing. The Novartis Stock Purchase Agreement also contains customary representations, warranties, and covenants of both parties.
Previous report
On the Novartis Effective Date, we and Novartis also entered into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which we have agreed, within the time periods specified in the Registration Rights Agreement, to register the resale of the Novartis Shares on a registration statement to be filed with the SEC. The Registration Rights Agreement contains customary indemnification provisions, and all registration rights terminate in their entirety effective on the first date on which there cease to be any Registrable Securities (as defined in the Registration Rights Agreement) outstanding.
Previous report
We will also be eligible to receive milestone payments of up to an aggregate of approximately $1.4 billion as well as certain research funding. If licensed products resulting from the collaboration are approved and sold, we will also be entitled to receive tiered royalties ranging from the mid-single digit to low-double digit percentages on net sales of licensed products, subject to customary potential reductions. Novartis’s obligation to pay royalties to us expires on a country-by-country and licensed product-by-licensed product basis, upon the latest to occur of certain events related to expiration of patents, regulatory exclusivity or a period of ten years following the first commercial sale of the licensed product.
Previous report
Unless earlier terminated, the Novartis Agreement will remain in effect on a licensed product-by-licensed product and country-by-country basis until the expiration of a defined royalty term for each licensed product and country. Novartis has the right to terminate the Novartis Agreement without cause by providing advance notice to us. Either party may terminate the Novartis Agreement for material breach by the other party and a failure to cure such breach within the time period specified in the Novartis Agreement. We may also terminate the Novartis Agreement in the event that Novartis brings a challenge to our patents.
Previous report
On November 19, 2020, we entered into a development and license agreement with Eli Lilly and Company (“Lilly”) to collaborate to discover and developin vivo gene editing products incorporating our ARCUS nucleases to utilize ARCUS for the research and development of potentialin vivo therapies for genetic disorders. This agreement was subsequently assigned to Prevail Therapeutics, a wholly-owned subsidiary of Lilly, effective November 1, 2022 (the “Original Prevail Agreement”). On June 30, 2023, we entered into the Prevail Agreement which amended and restated the Original Prevail Agreement. In April 2024, we exercised our rights to the return of three programs with the conclusion of the collaboration with Prevail.
Previous report
iECURE
Previous report
Research and Development Expenses
Previous report
General and Administrative Expenses
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Loss on Disposal of Assets
Previous report
Interest Expense
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Interest Income
Previous report
Loss from Discontinued Operations
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Research and Development Expenses
Previous report
General and Administrative Expenses
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Interest Expense
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Interest Income
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Loss on Disposal of Assets
Previous report
Loss from Discontinued Operations
Previous report
Cash used in operating activities during the three months ended March 31, 2024 was $19.0 million compared to $31.5 million during the three months ended March 31, 2023. The $12.5 million decrease in cash used in operating activities was primarily driven by a $33.6 million decrease in net loss offset by a $15.9 million decrease in non-cash adjustments to reconcile net loss to net cash and a $5.3 million increase in the use of working capital. The decrease in non-cash adjustments was primarily related to the change in fair value of the warrant liability and a gain on equity method investments in the three months ended March 31, 2024 as compared to a loss on equity method investments in the three months ended March 31, 2023. The increase in use of working capital primarily reflects a change in the contract asset and prepaid expenses.
Reworded paragraphs (38)
Previous wording
As of August 2023, we are now solely focused on leveraging our proprietary ARCUS genome editing platform to advancein vivo gene editing programs that go beyond gene knockouts in the liver and carry out more sophisticated edits such as gene insertions, gene excision, and gene elimination, unlocking a broader potential for ARCUS in vivo gene editing in human therapeutics.
Current wording
As of mid-2023, we are solely focused on leveraging our proprietary ARCUS genome editing platform to advancein vivo gene editing programs that go beyond gene knockouts in the liver and carry out more sophisticated edits such as gene insertions, gene excision, and gene elimination, unlocking a broader potential for ARCUS in vivo gene editing in human therapeutics.
Previous wording
In January 2024, we entered into a license agreement with TG Cell Therapy, Inc. (“TG Subsidiary”) and its parent company TG Therapeutics, Inc. (“TG Parent” and, together with TG Subsidiary, “TG Therapeutics”) for non-oncological applications of azercabtagene zapreleucel (“azer-cel”) (the “TG License Agreement”). In connection with the TG License Agreement, we received upfront, and are also entitled to receive potential near-term, economics valued in the aggregate at $17.5 million. The upfront payment was received on February 5, 2024 and is comprised of a (i) $5.25 million cash payment and (ii) $2.25 million cash payment in exchange for 97,360 shares of our common stock by TG Therapeutics at a price of $23.10 per share, a 100% premium to the 30-day volume weighted-average price (“VWAP”) prior to the date of the TG License Agreement. We will also receive $2.5 million within 12 months as an equity investment in our common stock at 100% premium to the then 30-day VWAP prior to purchase. Upon the achievement of certain near-term clinical milestones, we will receive an additional $7.5 million payment in cash and the purchase of our common stock by TG Therapeutics at a 100% premium to the then current 30-day VWAP. We are eligible to receive up to $288 million in additional milestone payments based on the achievement of certain clinical, regulatory, and commercial milestones, in addition to high-single-digit to low-double-digit royalties on net sales.
Current wording
In January 2024, we entered into a license agreement with TG Cell Therapy, Inc. (“TG Subsidiary”) and its parent company TG Therapeutics, Inc. (“TG Parent” and, together with TG Subsidiary, “TG Therapeutics”) for non-oncological applications of azercabtagene zapreleucel (“azer-cel”) (the “TG License Agreement”). In connection with the TG License Agreement, we received upfront, and are also entitled to receive potential near-term, economics valued in the aggregate at $17.5 million. We are also entitled to receive additional payments upon the achievement of additional specified milestones of up to $288.6 million. If a licensed product under the TG License Agreement is approved and sold, TG Therapeutics is also required to pay us tiered royalties ranging from high-single-digit to low-double-digit percentages on net sales of the licensed product.
Previous wording
Our gene editing program PBGENE-HBV, for the potential treatment of chronic hepatitis B virus (“HBV”), remains a top priority, and we expect to submit an investigational new drug (“IND”) application or clinical trial application (“CTA”) in 2024. HBV causes inflammation and damage to the liver, leading to chronic infection and increased risk of death from liver cancer or cirrhosis. There is no cure for chronic hepatitis B and current treatments rarely result in functional cure, primarily due to persistence of viral DNA in the liver. In patients with chronic HBV, genetic material of the virus is converted within infected liver cells into covalently closed circular DNA (“cccDNA”) that acts as a template to make HBV copies. HBV also inserts its DNA into the human genome of infected liver cells. This integrated HBV DNA produces the viral protein, hepatitis B surface antigen (“HBsAg”), which is secreted in the blood. Presence of HBsAg is associated with poorer outcomes and elimination of HBsAg is necessary for functional cure of chronic hepatitis B.
Current wording
HBV causes inflammation and damage to the liver, leading to chronic infection and increased risk of death from liver cancer or cirrhosis. There is no cure for chronic hepatitis B and current treatments rarely result in functional cure, primarily due to persistence of viral DNA in the liver. In patients with chronic HBV, genetic material of the virus is converted within infected liver cells into covalently closed circular DNA (“cccDNA”) that acts as a template to make HBV copies. HBV also inserts its DNA into the human genome of infected liver cells. This integrated HBV DNA produces the viral protein, hepatitis B surface antigen (“HBsAg”), which is secreted in the blood. Presence of HBsAg is associated with poorer outcomes and elimination of HBsAg is necessary for functional cure of chronic hepatitis B.
Previous wording
PBGENE-HBV is designed to inactivate cccDNA with direct cuts and edits as well as to inactivate integrated HBV DNA with the goal of long-lasting reductions in HBsAg. We believe specificity is of particular importance for developing a safe gene editing approach to eliminating HBV, as a lack of nuclease specificity can lead to unfavorable off-target results including increased integrations of HBV genomes into the human genome, as well as translocations between integrations. Preclinical data from the PBGENE-HBV program was presented in April 2023 at an oral presentation at the Global Hepatitis Summit 2023, in June 2023 at an oral presentation at the European Association for Study of the Liver Congress 2023, and in November 2023 at the American Association for the Study of Liver Diseases Annual Meeting. Data highlighted that ARCUS nucleases exhibited high levels of on-target editing and demonstrated substantial reductions of both intracellular cccDNA and secreted HBsAg with no detectable translocations in primary human hepatocytes. In February 2024, we announced that we had received pre-IND regulatory feedback from the U.S. FDA in addition to regulatory feedback from agencies outside the U.S. providing clarity and alignment on PBGENE-HBV IND/CTA-enabling preclinical plans and clinical strategy.
Current wording
PBGENE-HBV is designed to inactivate cccDNA with direct cuts and edits as well as to inactivate integrated HBV DNA with the goal of long-lasting reductions in HBsAg. We believe specificity is of particular importance for developing a safe gene editing approach to eliminating HBV, as a lack of nuclease specificity can lead to unfavorable off-target results including increased integrations of HBV genomes into the human genome, as well as translocations between integrations. Preclinical data from the PBGENE-HBV program was presented in June 2024 at a poster presentation and panel discussion at the European Association for the Study of the Liver Congress, highlighting the ability of ARCUS to make efficient, durable, and targeted elimination edits. Data presented further supported the ability of PBGENE-HBV to specifically target and cut HBV DNA, leading to the elimination of cccDNA and inactivation of integrated HBV DNA. The data also demonstrated a lack of detectable off-target editing for PBGENE-HBV at therapeutically relevant doses, including no editing-associated translocations in HBV infected primary human hepatocytes. PBGENE-HBV was well-tolerated in non-human primates (“NHP”) across multiple dose administrations. Preclinical safety data supports the advancement of PBGENE-HBV to clinical trials as a potentially curative treatment for chronic hepatitis B.
Previous wording
At our R&D Day in September 2023, we announced that we intend to pursue development of PBGENE-PMM as a potential first-in-class opportunity for treatment of m.3243 associated primary mitochondrial myopathy (“PMM”). Mitochondrial diseases are the most common hereditary metabolic disorder, affecting 1 in 4,300 people. PMM currently lacks a curative treatment and impacts approximately 50% of patients with mitochondrial disease. The high specificity and single component nature of our mitoARCUS nucleases are designed to enable specific editing of mutant mitochondrial DNA while allowing normal (wild-type) mitochondrial DNA to repopulate in the mitochondria and restore normal function. Preclinical data from the PBGENE-PMM program presented in March 2024 at a poster presentation at the Mitochondrial Medicine – Therapeutic Development Annual Conference demonstrated ARCUS’ ability to efficiently eliminate mutant mitochondrial DNA without nuclear off-target editing. We expect to submit an IND and/or CTA application in 2025 with respect to PBGENE-PMM.
Current wording
PBGENE-PMM is our wholly owned, first of its kind treatment for m.3243 associated mitochondrial disease. Mitochondrial diseases are the most common hereditary metabolic disorder, affecting 1 in 4,300 people. The highly specific and single component nature of our mitochondria-targeted ARCUS nucleases are designed to shift heteroplasmy by editing and eliminating mutant mitochondrial DNA while allowing normal (wild-type) mitochondrial DNA to repopulate in the mitochondria, thus improving cellular function. Preclinical data from the PBGENE-PMM program presented in June 2024 at the United Mitochondrial Disease Foundation’s Mitochondrial Medicine 2024 Conference and in March 2024 at a poster presentation at the Mitochondrial Medicine – Therapeutic Development Annual Conference demonstrated ARCUS’ ability to efficiently eliminate mutant mitochondrial DNA without nuclear off-target editing. We expect to submit an IND and/or CTA application in 2025 with respect to PBGENE-PMM.
Previous wording
In partnership with iECURE, Inc. (“iECURE”), an ARCUS-mediated gene insertion approach is being pursued as a potential treatment option for neonatal onset ornithine transcarbamylase (“OTC”) deficiency. Non-human primate (“NHP”) data presented by researchers from the University of Pennsylvania’s Gene Therapy Program demonstrated sustained gene insertion of a therapeutic OTC transgene one-year post-dosing in newborn and infant NHPs with high efficiency. iECURE received approval from the Australian Therapeutic Goods Administration for the initiation of a first-in-human Phase 1/2 trial evaluating ECUR-506, an investigational therapy incorporating an ARCUS nuclease in development for the treatment of OTC deficiency in pediatric (or neonatal) patients. In March 2024, iECURE also received approval from the United Kingdom (“UK”) Medicines & Healthcare products Regulatory Agency for the company’s CTA application to expand the Phase 1/2 OTC-HOPE study evaluating ECUR-506 into the UK. In April 2024, iECURE announced FDA clearance to initiate the OTC-HOPE study in the U.S. iECURE’s OTC-HOPE study is currently open for enrollment at the Great Ormond Street Hospital for Children in the United Kingdom, and trial sites in the United States and Australia are activating and will be enrolling later this year.
Current wording
In partnership with iECURE, Inc. (“iECURE”), an ARCUS-mediated gene insertion approach is being pursued as a potential treatment option for neonatal onset ornithine transcarbamylase (“OTC”) deficiency. NHP data presented by researchers from the University of Pennsylvania’s Gene Therapy Program demonstrated sustained gene insertion of a therapeutic OTC transgene one-year post-dosing in newborn and infant NHPs with high efficiency. iECURE has received regulatory approvals in the United States, the United Kingdom, and Australia for initiation of the OTC-HOPE study, a first-in-human Phase 1/2 trial evaluating ECUR-506 as a potential treatment for OTC deficiency, and has begun recruiting patients at two sites in the United Kingdom. In May 2024, iECURE announced that it had received Fast Track designation from the FDA for ECUR-506 and expects initial data from this trial to be available in late 2024 or in 2025.
Previous wording
During the three months ended March 31, 2024, we recognized revenue under the TG License Agreement of $7.0 million. Deferred revenue related to the TG License Agreement amounted to $0.9 million as of March 31, 2024.
Current wording
During the three and six months ended June 30, 2024, we recognized revenue under the TG License Agreement of $0.9 million and $8.0 million, respectively. A contract asset related to the TG License Agreement amounted to $1.4 million as of June 30, 2024.
Previous wording
We concluded the Imugene License Agreement represents functional intellectual property in accordance with ASC 606 given we do not expect to provide any additional services to Imugene outside of the right to use the licensed intellectual property. As of March 31, 2024, management has constrained all variable consideration related to milestone payments in the Imugene License Agreement given the level of uncertainty associated with achievement of the milestone payments. Accordingly, no revenue was recognized under the Imugene License Agreement during the three months ended March 31, 2024.
Current wording
As of June 30, 2024, management has constrained all variable consideration related to milestone payments in the Imugene License Agreement given the level of uncertainty associated with achievement of the milestone payments. Accordingly, no revenue was recognized under the Imugene License Agreement during the three and six months ended June 30, 2024.
Previous wording
During three months ended March 31, 2024, we recognized revenue under the Novartis agreement of $4.5 million. During the three months ended March 31, 2023, we recognized revenue under the Novartis agreement of $5.9 million. Deferred revenue related to the Novartis Agreement amounted to $28.1 million and $32.4 million as of March 31, 2024 and December 31, 2023, respectively, of which $1.3 million and $7.4 million, respectively, was included in current liabilities within the condensed balance sheets.
Current wording
During the three months ended June 30, 2024 and 2023, we recognized revenue under the Novartis Agreement of $0.8 million and $4.8 million, respectively. During the six months ended June 30, 2024 and 2023, we recognized revenue under the Novartis Agreement of $5.3 million and $10.6 million, respectively. Deferred revenue related to the Novartis Agreement amounted to $27.3 million and $32.4 million as of June 30, 2024 and December 31, 2023, respectively, of which $0.5 million and $7.4 million, respectively, was included in current liabilities within the condensed balance sheets.
Previous wording
During the three months ended March 31, 2024 and 2023, we recognized revenue under the Prevail Agreement of $4.5 million and $2.9 million, respectively. Deferred revenue related to the Prevail Agreement amounted to $48.2 million and $52.7 million as of March 31, 2024 and December 31, 2023, respectively, of which $0.2 million and $4.7 million, respectively, was included in current liabilities within the condensed balance sheets. With the termination of the Prevail Agreement, we expect to recognize the remaining deferred revenue of $48.2 million in the three months ending June 30, 2024.
Current wording
During the three months ended June 30, 2024 and 2023, we recognized revenue under the Prevail Agreement of $48.2 million and $15.0 million, respectively. During the six months ended June 30, 2024 and 2023, we recognized revenue under the Prevail Agreement of $52.7 million and $17.9 million, respectively. There was no deferred revenue related to the Prevail Agreement as of June 30, 2024. Deferred revenue related to the Prevail Agreement amounted to $52.7 million as of December 31, 2023, of which $4.7 million was included in current liabilities within the condensed balance sheet.
Previous wording
Impairment charges represents our impairment of intangible assets and long-term prepaid assets. An impairment loss is assessed when future undiscounted cash flows are less than the assets’ carrying value and is recognized when the carrying value of the asset exceeds fair value. An impairment charge is recognized for the amount by which the carrying amount exceeds the fair value of the asset.
Current wording
Impairment charges represent our impairment of intangible assets and long-term prepaid assets. An impairment loss is assessed when future undiscounted cash flows are less than the assets’ carrying value and is recognized when the carrying value of the asset exceeds fair value. An impairment charge is recognized for the amount by which the carrying amount exceeds the fair value of the asset.
Previous wording
Loss on Changes in Fair Value
Current wording
Gain (Loss) on Changes in Fair Value
Previous wording
The change in fair value of represents the assessed changes in fair value of assets and liabilities carried at fair value.
Current wording
The change in fair value represents the assessed changes in fair value of assets and liabilities carried at fair value.
Previous wording
In August 2021, we entered into a development and license agreement with iECURE (the “iECURE DLA”) under which iECURE was to advance our PBGENE-PCSK9 candidate through preclinical activities as well as a Phase 1 clinical trial in order to gain access to a license to use our PCSK9-directed ARCUS nuclease to insert genes into the PCSK9 locus to develop treatments for four pre-specified rare genetic diseases, including OTC deficiency (the “PCSK9 License”). Simultaneously with the entry into the iECURE DLA, we and iECURE entered into an equity issuance agreement (the “iECURE Equity Agreement”), pursuant to which iECURE issued us common stock in iECURE as additional consideration for the PCSK9 License. Additionally, we are eligible to receive milestone and mid-single digit to low double digit royalty payments on sales of iECURE products developed with ARCUS.
Current wording
In August 2021, we entered into a development and license agreement with iECURE (the “iECURE DLA”) and an equity issuance agreement (the “iECURE Equity Agreement”), pursuant to which iECURE issued us common stock in iECURE as additional consideration for the PCSK9 License. Additionally, we are eligible to receive milestone and mid-single digit to low-double digit royalty payments on sales of iECURE products developed with ARCUS.
Previous wording
We adjust the carrying value of the iECURE equity to fair value each reporting period with any changes in fair value recorded to other income (expense). There was no change in the fair value of the iECURE equity for the three months ended March 31, 2024. During the three ended March 31, 2023, we recorded a $0.8 million decrease in the carrying value of our iECURE equity to adjust to fair value as a result of dilution from iECURE’s Series A-1 equity issued in such period.
Current wording
We adjust the carrying value of the iECURE equity to fair value each reporting period with any changes in fair value recorded to other income (expense).
Previous wording
Revenue for the three months ended March 31, 2024 was $17.6 million, compared to $8.8 million for the three months ended March 31, 2023. The increase of $8.8 million in revenue during the three months ended March 31, 2024 was primarily the result of the TG and Caribou license agreements. Additionally contributing to the increase in revenue was a $1.6 million increase in revenue recognized under the Prevail Agreement offset by a $1.4 million decrease in revenue recognized under the Novartis Agreement during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Current wording
Revenue for the three months ended June 30, 2024 was $49.9 million, compared to $19.8 million for the three months ended June 30, 2023. The increase of $30.1 million in revenue during the three months ended June 30, 2024 was primarily the result of a $33.2 million increase in revenue related to the Prevail Agreement as the remaining deferred revenue under the agreement was recognized during the three months ended June 30, 2024 with the termination of the agreement. Additionally, there was a $0.9 million increase in revenue in the three months ended June 30, 2024 as a result of the TG License Agreement. Partially offsetting these increases was a $4.0 million decrease in revenue recognized under the Novartis Agreement during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Previous wording
Research and development expenses for the three months ended March 31, 2024 were $13.3 million, compared to $11.0 million for the three months ended March 31, 2023. The increase of $2.3 million was primarily due to a $2.8 million increase in PBGENE-HBV external development costs and a $1.2 million increase in PBGENE-PMM external development costs as the programs continue to advance towards the clinic.
Current wording
Research and development expenses for the three months ended June 30, 2024 were $17.2 million, compared to $13.1 million for the three months ended June 30, 2023. The increase of $4.1 million was primarily due to a $6.9 million increase in PBGENE-HBV external development costs and a $1.0 million increase in PBGENE-PMM external development costs as the programs continue to advance towards the clinic.
Previous wording
Partially offsetting the increases in research and development expenses was a $0.9 million decrease in laboratory supplies and services expenses, a $0.6 million decrease in employee-related costs as a result of reduced headcount, and a decrease in outsourced R&D costs.
Current wording
Partially offsetting the increases in research and development expenses was a $1.6 million decrease in outsourced research and development costs, a $1.3 million decrease in laboratory supplies and services expenses, and a $0.7 million decrease in employee-related costs and share based compensation expense.
Previous wording
Gain from equity method investment was $1.7 million during the three months ended March 31, 2024 which was primarily the result of a $2.7 million gain recorded from our proportionate share of Elo’s proceeds from a Series A-2 financing in such period, partially offset by our proportionate share of Elo’s loss, or $1.0 million, in such period. Loss from equity method investment was $1.3 million during the three months ended March 31, 2023, which represented our proportionate share of Elo’s net loss for such period.
Current wording
Loss from equity method investment was $1.0 million during the three months ended June 30, 2024 compared to $1.4 million during the three months ended June 30, 2023, which represented our proportionate share of Elo’s net loss in each period.
Previous wording
Change in fair value of the warrant liability of $10.4 million for the three months ended March 31, 2024 represents the mark-to-market fair value adjustment to the outstanding warrants issued in connection with the March 2024 Public Offering. There was no warrant liability in the three months ended March 31, 2023.
Current wording
Change in fair value of the warrant liability of $7.8 million for the three months ended June 30, 2024 represents the mark-to-market fair value adjustment to the outstanding warrants issued in connection with the March 2024 Public Offering. There was no warrant liability in the three months ended June 30, 2023.
Previous wording
Interest expense was $0.6 million for the three months ended March 31, 2024 compared to $0.5 million for the three months ended March 31, 2023. The $0.1 million increase in interest expense was the result of higher stated and effective interest rates on our debt.
Current wording
Interest expense was $0.6 million for the three months ended June 30, 2024 and 2023.
Previous wording
Interest income was $1.7 million during the three months ended March 31, 2024 compared to $2.0 million during the three months ended March 31, 2023. The $0.3 million decrease in interest income was the result of a lower cash balance during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
Current wording
Interest income was $1.8 million during the three months ended June 30, 2024 compared to $1.9 million during the three months ended June 30, 2023. The $0.1 million decrease in interest income was the result of a lower cash balance during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.
Previous wording
Loss on disposal of assets was less than $0.1 million during the three months ended March 31, 2024 and 2023.
Current wording
Loss on disposal of assets was $0.2 million during the three months ended June 30, 2024 compared to a gain of less than $0.1 million during the three months ended June 30, 2023.
Previous wording
There was no loss from discontinued operations during the three months ended March 31, 2024 compared to a loss of $11.1 million during the three months ended March 31, 2023. The $11.1 million loss during the three months ended March 31, 2023 consisted of research and development expenses for our historical cell therapy operations.
Current wording
There was no loss from discontinued operations during the three months ended June 30, 2024 compared to a loss of $8.9 million during the three months ended June 30, 2023. The $8.9 million loss during the three months ended June 30, 2023 consisted of research and development expenses for our historical cell therapy operations.
Previous wording
General and administrative expenses were $8.4 million for the three months ended March 31, 2024 compared to $11.1 million for the three months ended March 31, 2023. The decrease of $2.7 million in general and administrative expenses was primarily due to a $1.5 million decrease in employee-related costs and share based compensation expense as a result of reduced headcount. Additionally contributing to the decrease was a $0.6 million decrease in consulting fees, a decrease in insurance expense driven by a reduction in director and officer insurance premiums and a decrease in legal fees.
Current wording
General and administrative expenses were $17.0 million for the six months ended June 30, 2024 compared to $20.9 million for the six months ended June 30, 2023. The decrease of $3.9 million was primarily due to a $2.4 million decrease in employee-related costs and share based compensation expense as a result of a reduced headcount, a $0.7 million decrease in consulting fees, and decreases in insurance expense and legal fees.
Previous wording
Loss from changes in fair value was $0.3 million for the three months ended March 31, 2024 which was primarily attributed to the decrease in the fair value of the Imugene Convertible Note in such period. Loss from changes in fair value was $0.8 million for the three months ended March 31, 2023 which was attributed to a decrease in the assessed fair value of our equity investment in iECURE as a result of dilution from iECURE’s Series A-1 equity raise in such period.
Current wording
Gain from changes in fair value was $0.3 million for the six months ended June 30, 2024 which was primarily attributed to an increase in the fair value of the Imugene Convertible Note in such period. Loss on changes in fair value was $0.8 million for the six months ended June 30, 2023 which was attributed to a decrease in the assessed fair value of our equity investment in iECURE as a result of dilution from iECURE’s Series A-1 equity raise in such period.
Previous wording
We have incurred significant operating losses since our inception and have not generated any revenue from the sale of products. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our product candidates or the product candidates of our collaborators or other licensees for which we may receive milestone payments or royalties. As of March 31, 2024, we had an accumulated deficit of $481.0 million.
Current wording
We have incurred significant operating losses since our inception and have not generated any revenue from the sale of products. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our product candidates or the product candidates of our collaborators or other licensees for which we may receive milestone payments or royalties. As of June 30, 2024, we had an accumulated deficit of $448.3 million.
Previous wording
CROs and CMOs, expanding our intellectual property portfolio and providing general and administrative support for our operations. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing and distribution. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.
Current wording
contract research organizations ("CROs") and CMOs, expanding our intellectual property portfolio and providing general and administrative support for our operations. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing and distribution. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.
Previous wording
As of March 31, 2024, we had cash and cash equivalents of $137.8 million and available borrowings under our loan and security agreement with Banc of California (formerly known as Pacific Western Bank) (as amended from time to time, the “Revolving Line”) of $7.5 million. Covenants on our Revolving Line require that we maintain an aggregate balance of unrestricted cash (not including amounts in certain specified accounts) equal to or greater than $10.0 million. Our sources of funding to finance our cash needs include proceeds from third parties through a combination of financings including our initial public offering (“IPO”), preferred stock and convertible note financings, underwritten offerings of our common stock and warrants, at-the-market (“ATM”) offerings of our common stock as part of our shelf registration statement, upfront and milestone payments from partners, borrowings under bank facilities and funding from other strategic alliances and grants.
Current wording
As of June 30, 2024, we had cash and cash equivalents of $123.6 million and available borrowings under our loan and security agreement with Banc of California (formerly known as Pacific Western Bank) (as amended from time to time, the “Revolving Line”) of $7.5 million. On July 31. 2024, we entered into an amended and restated loan and security agreement with Banc of California (the “2024 Loan and Security Agreement”), pursuant to which we refinanced the Revolving Line with a new term loan (the “2024 Term Loan”). Pursuant to the terms of the 2024 Loan and Security Agreement, we are not entitled to borrow any additional amounts under the 2024 Term Loan and are required to maintain an aggregate balance in a cash security account with Banc of California (the “Cash Security Account”) at least equal to the outstanding principal amount of the 2024 Term Loan then outstanding. Our sources of funding to finance our cash needs include proceeds from third parties through a combination of financings including our initial public offering (“IPO”), preferred stock and convertible note financings, underwritten offerings of our common stock and warrants, at-the-market (“ATM”) offerings of our common stock as part of our shelf registration statement, upfront and milestone payments from partners, borrowings under bank facilities and funding from other strategic alliances and grants.
Previous wording
Our cash and cash equivalents totaled $137.8 million and $158.1 million as of March 31, 2024 and 2023, respectively.
Current wording
Our cash and cash equivalents totaled $123.6 million and $137.8 million as of June 30, 2024 and 2023, respectively.
Previous wording
Our primary use of cash is to fund operating expenses, which consist primarily of research and development and general and administrative costs. The use of cash in operating activities during the three months ended March 31, 2024 and March 31, 2023 resulted from our net loss adjusted for non-cash expenses and changes in working capital.
Current wording
Our primary use of cash is to fund operating expenses, which consist primarily of research and development and general and administrative costs. The use of cash in operating activities during the six months ended June 30, 2024 and June 30, 2023 resulted from our net loss adjusted for non-cash items and changes in operating assets and liabilities.
Previous wording
Cash used in investing activities primarily relates to cash expenditures to acquire leasehold additions, equipment, software and intangible assets. Net cash used in investing activities during the three months ended March 31, 2024 was less than $0.1 million, compared to $0.7 million in the three months ended March 31, 2023. The $0.7 million decrease in cash used in investing activities was primarily driven by a decrease in cash expenditures for purchases of property, equipment and software during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Current wording
Cash used in investing activities primarily relates to cash expenditures to acquire leasehold additions, equipment, software and intangible assets. Net cash used in investing activities during the six months ended June 30, 2024 was less than $0.1 million, compared to $1.8 million in the six months ended June 30, 2023. The $1.7 million decrease in cash used in investing activities was primarily driven by a decrease in cash expenditures for purchases of property, equipment and software during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Previous wording
Net cash provided by financing activities during the three months ended March 31, 2024 was $40.1 million, compared to $0.7 million during the three months ended March 31, 2023. The $39.4 million increase in cash provided by financing activities during the three months ended March 31, 2024 was primarily due to a $38.6 million increase in net proceeds from offerings of common stock in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 and $0.9 million in net proceeds from the issuance of common stock to TG Therapeutics in the three months ended March 31, 2024.
Current wording
Net cash provided by financing activities during the six months ended June 30, 2024 was $40.8 million, compared to $2.6 million during the six months ended June 30, 2023. The $38.2 million increase in cash provided by financing activities during the six months ended June 30, 2024 was primarily due to a $37.5 million increase in net proceeds from offerings of common stock in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 and $0.9 million in net proceeds from the issuance of common stock to TG Therapeutics in the six months ended June 30, 2024.
Previous wording
We may request advances on our Revolving Line up to an aggregate principal of $30.0 million. The Revolving Line maturity date is June 23, 2024 and all outstanding principal amounts are due upon maturity. We must also maintain an aggregate balance of unrestricted cash at Banc of California (not including amounts in certain specified accounts) equal to or greater than $10.0 million. The interest rate on Revolving Line borrowings is a variable annual rate equal to the greater of (a) 0.75% above the Prime Rate (as defined in the Revolving Line), and (b) 4.25%. As of March 31, 2024, the outstanding principal balance on the Revolving Line was $22.5 million, the stated interest rate was 9.25% and the effective interest rate was 10.27%.
Current wording
As of June 30, 2024, we had the right to request advances on our Revolving Line up to an aggregate principal amount of $30.0 million. On June 21, 2024, the Revolving Line maturity date was extended from June 23, 2024 to July 31, 2024, with all outstanding principal amounts due upon maturity. The interest rate on Revolving Line borrowings is a variable annual rate equal to the greater of (a) 0.75% above the Prime Rate (as defined in the Revolving Line), and (b) 4.25%. As of June 30, 2024, the outstanding principal balance on the Revolving Line was $22.5 million, the stated interest rate was 9.25% and the effective interest rate was 9.99%.
Previous wording
In March 2024, we entered into an underwriting agreement relating to the offering, issuance and sale of an aggregate of 2,500,000 shares of our common stock and warrants to purchase up to an aggregate of 2,500,000 shares of our common stock at a combined offering price of $16.00 per share. Each warrant has an exercise price per share of $20.00, is immediately exercisable and will expire on March 5, 2029. The offering was made pursuant to a registration statement on Form S-3. Gross proceeds from the transaction were $40.0 million before deducting underwriting discounts and commissions and offering expenses of approximately $2.9 million. We intend to use the net proceeds of the offering to fund ongoing and planned research and development, and for working capital and other general corporate purposes.
Current wording
In March 2024, we entered into an underwriting agreement relating to the offering, issuance and sale of an aggregate of 2,500,000 shares of our common stock and warrants to purchase up to an aggregate of 2,500,000 shares of our common stock at a combined offering price of $16.00 per share. Each warrant has an exercise price per share of $20.00, is immediately exercisable and will expire on March 5, 2029. The offering was made pursuant to a registration statement on Form S-3. Gross proceeds from the transaction were $40.0 million before deducting underwriting discounts and commissions and offering expenses of approximately $3.0 million. We intend to use the net proceeds of the offering to fund ongoing and planned research and development, and for working capital and other general corporate purposes.
Previous wording
In addition to the contractual obligations and commitments as described elsewhere in this Quarterly Report on Form 10-Q with respect to leases, the Revolving Line, and intellectual property licenses, we also enter into contracts in the normal course of business with CMOs, universities, and other third parties for preclinical research studies, testing, manufacturing services, and other services and products for operating purposes. These contracts are generally cancelable upon written notice. There have been no material changes to our contractual obligations from those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Current wording
In addition to the contractual obligations and commitments as described elsewhere in this Quarterly Report on Form 10-Q with respect to leases, outstanding indebtedness, and intellectual property licenses, we also enter into contracts in the normal course of business with CMOs, universities, and other third parties for preclinical research studies, testing, manufacturing services, and other services and products for operating purposes. These contracts are generally cancelable upon written notice. There have been no material changes to our contractual obligations from those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Previous wording
The Company does not have any material capital expenditure commitments at March 31, 2024.
Current wording
The Company does not have any material capital expenditure commitments as of June 30, 2024.
Previous wording
Our critical accounting policies and estimates are described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in our Annual Report on Form 10-K. We have reviewed those critical accounting policies and estimates for the three months ended March 31, 2024. Other than the derivative financial instruments basis of accounting outlined in Note 1, there have been no significant changes in our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Current wording
Our critical accounting policies and estimates are described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in our Annual Report on Form 10-K. We have reviewed those critical accounting policies and estimates for the six months ended June 30, 2024. Other than the derivative financial instruments basis of accounting outlined in Note 1, there have been no significant changes in our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
Gain from changes in fair value was $0.7 million for the three months ended June 30, 2024 which was primarily attributed to an increase in the fair value of the Imugene Convertible Note in such period. There was no change in fair value for the three months ended June 30, 2023.
Current report — wording carried from elsewhere
The following table summarizes our results of operations for the six months ended June 30, 2024 and June 30, 2023, together with the changes in those items:
Current report — wording carried from elsewhere
Research and development expenses for the six months ended June 30, 2024 were $30.6 million, compared to $24.1 million for the six months ended June 30, 2023. The increase of $6.5 million was primarily due to a $9.8 million increase in PBGENE-HBV external development costs and a $2.2 million increase in PBGENE-PMM external development costs as the programs continue to advance towards the clinic.
Current report — wording carried from elsewhere
Partially offsetting the increases in research and development expenses was a $2.2 million decrease in laboratory supplies and services expenses, a $2.0 million decrease in outsourced research and development costs, and a $1.4 million decrease in employee-related costs and share based compensation expense.
Current report — wording carried from elsewhere
Gain from equity method investment was $0.8 million during the six months ended June 30, 2024. Loss from equity method investment was $2.7 million during the six months ended June 30, 2023, which represented our proportionate share of Elo’s net loss for such periods.
Current report — wording carried from elsewhere
Change in Fair Value of Warrant Liability
Current report — wording carried from elsewhere
Change in fair value of the warrant liability of $18.2 million for the six months ended June 30, 2024 represents the mark-to-market fair value adjustment to the outstanding warrants issued in connection with the March 2024 Public Offering. There was no warrant liability in the six months ended June 30, 2023.
Current report — wording carried from elsewhere
There was no loss from discontinued operations during the six months ended June 30, 2024 compared to a loss of $20.0 million during the six months ended June 30, 2023. The $20.0 million loss during the six months ended June 30, 2023 consisted of research and development expenses for our historical cell therapy operations.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
On January 7, 2024, we entered into a license agreement (the “TG License Agreement”) with TG Cell Therapy, Inc. (“TG Subsidiary”) and its parent company TG Therapeutics, Inc. (“TG Parent” and, together with TG Subsidiary, “TG Therapeutics”), pursuant to which we granted TG Subsidiary certain exclusive and non-exclusive license rights to develop, manufacture, and commercialize azer-cel for autoimmune diseases and other indications outside of cancer pursuant to the terms of the TG License Agreement.
Previous report — wording carried elsewhere
Loss on Changes in Fair Value