Neurogene Inc

Previous wording

Despite recent scientific advances in genetics, most neurological diseases, particularly those with devastating consequences to patients, are left untreated. Conventional gene therapy is an attractive potential treatment approach for only a limited number of monogenic diseases due to the challenges caused by the complex biology of neurological diseases and by inherent variable transgene uptake and expression. We are a clinical-stage biotechnology company committed to overcoming these limitations and turning today’s complex devastating neurological diseases into treatable conditions. By harnessing our proprietary transgene regulation technology, EXACTTM (Expression Attenuation via Construct Tuning), we are building a robust and differentiated product portfolio of genetic medicines for rare neurological diseases with high unmet need not otherwise addressable by conventional gene therapy. Our EXACT approach leverages key scientific breakthroughs, including gene transfer technology, microRNA-based genetic circuits, and adeno-associated virus delivery, and is designed to deliver therapeutic levels of transgene to key areas of the brain that underlie neurological disease pathology.

Current wording

Despite recent scientific advances in genetics, most neurological diseases, particularly those with devastating consequences to patients, are left untreated. Conventional gene therapy is an attractive potential treatment approach for only a limited number of monogenic diseases due to the challenges caused by the complex biology of neurological diseases and by inherent variable transgene uptake and expression. We are a clinical-stage biotechnology company committed to overcoming these limitations and turning today’s complex devastating neurological diseases into treatable conditions. By harnessing our proprietary transgene regulation technology, EXACTTM (Expression Attenuation via Construct Tuning), we are building a robust and differentiated product portfolio of genetic medicines for rare neurological diseases with high unmet need not otherwise addressable by conventional gene therapy. Our EXACT approach leverages key scientific breakthroughs, including gene transfer technology, microRNA-based genetic circuits, and adeno-associated virus (AAV) delivery, and is designed to deliver therapeutic levels of transgene to key areas of the brain that underlie neurological disease pathology.

Previous wording

Our first clinical-stage program to utilize the EXACT platform is NGN-401, which is under development for the treatment of Rett syndrome, a disease with a patient population that has a significant unmet need, and that ultimately progresses to substantial neurological and physical impairment and premature death. In January 2023, we received clearance from the FDA for our IND application for a Phase 1/2 clinical trial of NGN-401 for the treatment of pediatric female patients. The Phase 1/2 clinical trial is an open-label, multi-center clinical trial that will assess the safety, tolerability, and efficacy of two doses of NGN-401 delivered using a one-time intracerebroventricular procedure, which we believe is the most suitable route of administration to achieve optimal biodistribution in key regions of the brain. In January 2024, we announced that the clearance by the United Kingdom (UK) Medicines and Healthcare Products Regulatory Agency of the clinical trial application for NGN-401, allowing us to expand enrollment of the Phase 1/2 clinical trial in the UK. Consistent with our clinical development strategy, in February 2024, we amended the protocol to expand the low dose Cohort 1 to add three additional patients for a total of eight patients and remove staggered dosing, as well as adding a second high dose cohort of eight patients. This approach provides us the flexibility to evaluate two doses concurrently, both of which we expect to be efficacious based on preclinical data, with higher doses demonstrating greater biodistribution preclinically. We also believe that including two concurrent dose cohorts in this clinical trial will result in a more robust dataset that we will be able to use to inform a future registrational trial design. NGN-401 was manufactured at our manufacturing facility and clinical-grade product is being used for dosing in the Phase 1/2 clinical trial that is currently enrolling participants. We have now also received acknowledgement from the Australian Therapeutic Goods Administration and approval from the Human Research Ethics Committee to conduct the Phase 1/2 clinical trial for NGN-401, providing clearance for the trial in a third region.

Current wording

Our first clinical-stage program to utilize the EXACT platform is NGN-401, which is in development for the treatment of Rett syndrome, a disease with a patient population that has a significant unmet need, and that ultimately progresses to substantial neurological and physical impairment and premature death. In January 2023, we received clearance from the FDA for our IND application for a Phase 1/2 clinical trial of NGN-401 for the treatment of pediatric female patients with Classic Rett syndrome. The Phase 1/2 clinical trial is an open-label, multi-center trial that is assessing the safety, tolerability, and efficacy of two doses of NGN-401 delivered using a one-time intracerebroventricular procedure, which we believe is the most suitable route of administration to achieve optimal biodistribution in key regions of the brain and other parts of the nervous system. In January 2024, we announced clearance by the United Kingdom (UK) Medicines and Healthcare Products Regulatory Agency of the clinical trial application for NGN-401, allowing us to expand enrollment of the Phase 1/2 clinical trial in the UK. We also announced during the first quarter acknowledgement from the Australian Therapeutic Goods Administration and approval from the Human Research Ethics Committee to conduct the Phase 1/2 clinical trial for NGN-401, providing clearance for the trial in a third region. Consistent with our clinical development strategy, in February 2024, we amended the protocol to expand the Low-dose Cohort 1 to add three additional patients for a total of eight patients and remove staggered dosing, as well as adding a High-dose Cohort 2 comprised of eight patients. The first three patients in Cohort 2 will be dosed in a staggered manner, which may result in a slower inital enrollment in Cohort 2. This approach provides us the flexibility to evaluate two doses concurrently, both of which we expect to be efficacious based on preclinical data, with a higher dose demonstrating greater biodistribution preclinically. We also believe that including two concurrent dose cohorts in this clinical trial will result in a more robust dataset that we will be able to use to inform a future registrational trial design. NGN-401 was manufactured at our manufacturing facility and clinical-grade product is being used for dosing in the Phase 1/2 clinical trial..

Previous wording

In March 2024, we announced the dosing of the third patient in the Phase 1/2 clinical trial in Cohort 1. In May 2024, we presented data from the Phase 1/2 clinical trial at the ASGCT 27th Annual Meeting which demonstrated a favorable safety profile in the first three pediatric patients dosed in Cohort 1 (starting in 3Q:23 through 1Q:24), including one with a mild variant predicted to result in residual MeCP2 expression, with no signs or symptoms indicative of overexpression-related toxicity reported in any patient. In addition, no treatment-emergent or procedure-related serious

Current wording

In March 2024, we announced dosing of the third patient in the Phase 1/2 clinical trial in Cohort 1. In May 2024, we presented data from the Phase 1/2 clinical trial at the ASGCT 27th Annual Meeting which demonstrated a favorable safety profile in the first three pediatric patients dosed in Cohort 1 (starting in 3Q:23 through 1Q:24), including one with a mild variant predicted to result in residual MeCP2 expression, with no signs or symptoms indicative of overexpression-related toxicity reported in any patient and no treatment-emergent or procedure-related serious adverse events (“SAEs”) reported. As of the presentation of that safety data, all treatment-related AEs were reported to have been mild/Grade 1, and transient or resolving, and most AEs included in that reported safety data were known potential risks of the virus vector used for delivery of NGN-401, which is an adeno-associated virus vector known as AAV9. In June 2024 at the International Rett Syndrome Foundation (IRSF) ASCEND Summit, we presented additional interim safety data for these first three patients, showing that NGN-401 continued to have a favorable safety profile.

Previous wording

We expect preliminary clinical data from the first cohort of patients in this study in the fourth quarter of 2024 and an updated dataset from an expanded number of patients in the second half of 2025.

Current wording

We expect preliminary clinical data from the first cohort of patients in this trial in the fourth quarter of 2024 and an updated dataset from an expanded number of patients in the second half of 2025.

Previous wording

In addition to NGN-401, we are also pursuing a conventional gene therapy program in an ongoing Phase 1/2 clinical trial of NGN-101 for the treatment of CLN5 Batten disease. This patient population has a significant unmet need, and experiences extensive neurological and physical impairment leading to blindness, loss of motor function and early mortality. Our Phase 1/2 clinical trial of NGN-101 is the first trial to assess the treatment of both neurodegenerative and ocular disease manifestations of Batten disease. A third-party manufacturer produced product for the NGN-101 program to initiate the Phase 1/2 clinical trial. Dosing for this program commenced in the second quarter of 2022. We have completed enrollment in the first two dosing cohorts and are currently enrolling a higher dosing cohort and expect interim clinical data in the second half of 2024. To enable a go/no-go decision to advance the program into a registration study, we are planning to request a clinical/regulatory strategy meeting with the FDA in the second half of 2024. The focus of this meeting will be to align with the FDA on the expected clinical requirements to support a streamlined registration pathway, which will be necessary to move this program forward into a pivotal clinical trial. Given the rarity of the disease, FDA alignment on a streamlined registrational pathway will be critical for continued investment in the program.

Current wording

In addition to NGN-401, we are also pursuing a conventional gene therapy program in an ongoing Phase 1/2 clinical trial of NGN-101 for the treatment of CLN5 Batten disease. This patient population has a significant unmet need, and experiences extensive neurological and physical impairment leading to blindness, loss of motor function and early mortality. Our Phase 1/2 clinical trial of NGN-101 is the first trial to assess the treatment of both neurodegenerative and ocular disease manifestations of Batten disease. A third-party manufacturer produced product for the NGN-101 program to initiate the Phase 1/2 clinical trial. Dosing for this program commenced in the second quarter of 2022 and we have now completed enrollment in this trial and expect interim clinical data in the fourth quarter of 2024. To enable a go/no-go decision to advance the program into a registration study, we are planning to request a clinical/regulatory strategy meeting with the FDA in the fourth quarter of 2024. The focus of this meeting will be to align with the FDA on the expected clinical requirements to support a streamlined registration pathway, which will be necessary to move this program forward into a pivotal clinical trial. Given the rarity of the disease, FDA alignment on a streamlined registrational pathway will be critical for continued investment in the program.

Previous wording

On December 18, 2023, we completed our business combination with with our wholly owned subsidiary incorporated in the state of Nevada, Neurogene Inc. (“Neurogene OpCo”) (the “Closing”) in accordance with the terms of the Agreement and Plan of Merger, dated as of July 17, 2023 (the “Merger Agreement”), by and among the Company, Project North Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and Neurogene OpCo, pursuant to which, among other matters, Merger Sub merged with and into Neurogene OpCo, with Neurogene OpCo surviving as a wholly owned subsidiary of the Company (the “Reverse Merger”). In connection with the completion of the Reverse Merger, the Company changed its name from “Neoleukin Therapeutics, Inc.” (“Neoleukin”) to “Neurogene Inc.,” and the business conducted by the Company became primarily the business conducted by Neurogene OpCo. Immediately prior to Closing, the Company effected a 1-for-4 reverse stock split (the “Reverse Stock Split”). Unless noted otherwise, all references in this Quarterly Report on Form 10-Q to share and per share amounts reflect the Reverse Stock Split.

Current wording

On December 18, 2023, we completed our business combination with Neurogene OpCo (the “Closing”) in accordance with the terms of the Agreement and Plan of Merger, dated as of July 17, 2023 (the “Merger Agreement”), by and among the Company, Project North Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and Neurogene OpCo, pursuant to which, among other matters, Merger Sub merged with and into Neurogene OpCo, with Neurogene OpCo surviving as a wholly owned subsidiary of the Company (the “Reverse Merger”). In connection with the completion of the Reverse Merger, the Company changed its name from “Neoleukin Therapeutics, Inc.” (“Neoleukin”) to “Neurogene Inc.,” and the business conducted by the Company became primarily the business conducted by Neurogene OpCo. Immediately prior to Closing, the Company effected a 1-for-4 reverse stock split (the “Reverse Stock Split”). Unless noted otherwise, all references in this Quarterly Report on Form 10-Q to share and per share amounts reflect the Reverse Stock Split.

Previous wording

Since our inception, we have funded our operations primarily with outside capital (e.g., proceeds from the sale of preferred stock and common stock) and have raised aggregate net proceeds of $332.4 million from these private placements. However, we have incurred significant recurring losses, including a net loss of$16.9 million and$12.3 million for thethree months ended March 31, 2024 and 2023, respectively. In addition, as of March 31, 2024, we had an accumulated deficit of$204.1 million and cash, cash equivalents and short term investments totaling$169.5 million. In order to continue our operations, we must achieve profitable operations and/or obtain additional equity or debt financing. Until we achieve profitability, management plans to fund our operations and capital expenditures with cash on hand and the sale and issuance of securities. There can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us. If we are unable to raise sufficient additional capital, we may be compelled to consider actions such as reducing the scope of our operations and planned capital expenditures or selling certain assets, including intellectual property assets.

Current wording

Since our inception, we have funded our operations primarily with outside capital (e.g., proceeds from the sale of preferred stock and common stock) and have raised aggregate net proceeds of $332.4 million from these private placements. However, we have incurred significant recurring losses, including a net loss of$35.4 million and$24.1 million for thesix months ended June 30, 2024 and 2023, respectively. In addition, as of June 30, 2024, we had an accumulated deficit of$222.6 million and cash, cash equivalents and short term investments totaling$153.9 million. In order to continue our operations, we must achieve profitable operations and/or obtain additional equity or debt financing. Until we achieve profitability, management plans to fund our operations and capital expenditures with cash on hand and the sale and issuance of securities. There can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us. If we are unable to raise sufficient additional capital, we may be compelled to consider actions such as reducing the scope of our operations and planned capital expenditures or selling certain assets, including intellectual property assets.

Previous wording

Uncertainty in the global economy presents significant risks to our business. We are subject to continuing risks and uncertainties in connection with the current macroeconomic environment, including high inflation, changes in interest rates, changes in foreign currency exchange rates, recent bank failures, proposed or adopted federal U.S. legislation seeking to limit the provision of services in our sector by certain non-U.S. entities, geopolitical factors, including the ongoing conflicts between Russia and Ukraine and Israel and the surrounding areas and the responses thereto, and supply chain disruptions. While management is closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, including the impacts on our participants in our Phase 1/2 clinical trials, employees, suppliers, vendors and business partners, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside our control and could exist for an extended period of time. Management will continue to evaluate the nature and extent of the potential impacts to our business, results of operations, liquidity and capital resources. For additional information, see the section entitled “Risk Factors.”

Current wording

Uncertainty in the global economy presents significant risks to our business. We are subject to continuing risks and uncertainties in connection with the current macroeconomic environment, including high inflation, changes in interest rates, changes in foreign currency exchange rates, recent bank failures, proposed or adopted federal U.S. legislation seeking to limit the provision of services in our sector by certain non-U.S. entities, geopolitical factors, including the ongoing conflicts between Russia and Ukraine and Israel and the surrounding areas and the responses thereto, the impacts of climate change, and supply chain disruptions. While management is closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, including the impacts on our participants in our Phase 1/2 clinical trials, employees, suppliers, vendors and business partners, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside our control and could exist for an extended period of time. Management will continue to evaluate the nature and extent of the potential impacts to our business, results of operations, liquidity and capital resources. For additional information, see the section entitled “Risk Factors.”

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

Research and development expenses were $13.5 million for the three months ended March 31, 2024, as compared to$10.3 million for the three months ended March 31, 2023.

Current wording

Research and development expenses were $15.7 million for thethree months ended June 30, 2024, as compared to$10.3 million for thethree months ended June 30, 2023.

Previous wording

Expenses related to the Rett syndrome program increased primarily due to a $1.3 million increase in clinical trial costs for the Phase 1/2 clinical trial of NGN-401, offset by a $0.1 million decline in preclinical costs. The decrease in expenses related to the Batten disease program was primarily driven by a $0.1 million decrease in clinical trial costs for the Phase 1/2 clinical trial of NGN-101. The increase in expenses related to the Early Discovery program was primarily driven by a $0.9 million increase in preclinical costs and $0.1 million increase in chemistry, manufacturing and control costs.

Current wording

Expenses related to the Rett syndrome program increased primarily due to a $1.3 million increase in clinical trial costs for the Phase 1/2 clinical trial of NGN-401. The increase in expenses related to the Batten disease program was primarily driven by a $0.2 million increase in clinical development costs and $0.1 million increase in clinical trial costs for the Phase 1/2 clinical trial of NGN-101. The increase in expenses related to the Early Discovery program was primarily driven by a $1.2 million increase in preclinical costs.

Previous wording

In 2021, we re-prioritized our pipeline and discontinued certain programs that were in the preclinical and IND-enabling phase of development and shifted focus to developing programs such as NGN-401 for the treatment of Rett syndrome with our EXACT technology. The decline in expenses related to Discontinued Programs in the first quarter of 2024 was primarily driven by a reduction in study closeout costs. Expenses for Discontinued Programs were substantially complete by year end 2023.

Current wording

In 2021, we re-prioritized our pipeline and discontinued certain programs that were in the preclinical and IND-enabling phase of development and shifted focus to developing programs such as NGN-401 for the treatment of Rett syndrome with our EXACT technology. The decline in expenses related to Discontinued Programs in the second quarter of 2024 was primarily driven by a reduction in study closeout costs. Expenses for Discontinued Programs were substantially complete by year end 2023.

Previous wording

General and administrative expenses were $5.2 million for the three months ended March 31, 2024, as compared to$2.8 million for the three months ended March 31, 2023. The increase was primarily attributable to: (i) increases in legal, audit, and other professional and consulting fees of approximately $0.9 million resulting from the transition from a private company into a public company, (ii) increases in rent of approximately $0.5 million as the Company assumed the Eastlake Lease (as defined below) and the Blaine Lease (as defined below) after the Reverse Merger closed, (iii) increases in compensation costs and stock-based compensation of approximately $0.8 million associated with increased headcount in general and administrative functions and a higher stock price as compared to prior year and (iv) increases in insurance and information technology costs of approximately $0.3 million. This was partially offset by the recovery of approximately $0.2 million related to a business email compromise attack by a third party in the prior year.

Current wording

General and administrative expenses were $5.3 million for thethree months ended June 30, 2024, as compared to$2.3 million for thethree months ended June 30, 2023. The increase was primarily attributable to: (1) approximately $1.4 million in employee-related expenses, including an increase of $0.8 million in stock-based compensation expense, driven by an increase in headcount to support our transition into a public company, (ii) approximately $0.6 million in professional services and consulting fees, (iii) approximately $0.6 million related to rent associated with the Company’s assumption of legacy Neoleukin facilities (the Eastlake Lease and Blaine Lease), and (iv) $0.5 million related to corporate related expenses and market research costs. This was partially offset by the recovery of approximately $0.1 million related to a business email compromise attack by a third party in the prior year.

Previous wording

Interest income increased by $1.5 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase was primarily due to a significant increase in the amount of Neurogene’s cash balances and a moderate rise in interest rates.

Current wording

Interest income increased by $1.3 million for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. The increase was primarily due to a significant increase in the amount of Neurogene’s cash balances and a modest rise in interest rates.

Previous wording

Other Expenses increased by $0.6 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase was primarily due to the accrual of a contingent consideration liability related to the Intellectual Property CVR (as defined in Note 9, Commitments and Contingencies, in the notes to the financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q) in connection with the licensing and intellectual property assignment agreement with a third party to develop and commercialize legacy Neoleukin assets (the “Third Party Licensing Agreement”).

Current wording

Other expenses increased by $0.5 million for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. The increase was primarily due to (1) the accrual of a contingent consideration liability related to the Intellectual Property CVR (as defined in Note 9, Commitments and Contingencies, in the notes to the financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q) in connection with the December 2023 Licensing Agreement and (2) the accrual of a contingent consideration liability related to the Sales Tax CVR for an anticipated sales tax refund from Washington state.

Previous wording

As of March 31, 2024, we had cash, cash equivalents and short term investments totaling$169.5 million. Since inception and through the issuance of these financial statements, we have funded our operations primarily through private placements of convertible preferred stock and common stock for net proceeds of $332.4 million.

Current wording

As of June 30, 2024, we had cash, cash equivalents and short term investments totaling$153.9 million. Since inception and through the issuance of these financial statements, we have funded our operations primarily through private placements of convertible preferred stock and common stock for net proceeds of $332.4 million.

Previous wording

For the three months ended March 31, 2024, we used $21.7 million of cash in operating activities. Cash used in operating activities reflected our net loss of $16.9 million, a $6.7 million net decrease in our operating assets and liabilities and noncash charges of $2.0 million, which consisted primarily of $1.0 million in stock-based compensation and $0.8 million in depreciation. The primary use of cash was to fund our operations related to the development of our product candidates, costs associated with the Reverse Merger and the Pre-Closing Financing, and related severance and retention payments to former Neoleukin employees.

Current wording

For the six months ended June 30, 2024, we used $37.5 million of cash in operating activities. Cash used in operating activities reflected our net loss of $35.4 million, a $7.6 million net decrease in our operating assets and liabilities and noncash charges of $5.5 million, which consisted primarily of $3.4 million in stock-based compensation, $1.6 million in depreciation and $0.8 million in non-cash CVR liability changes, partially offset by $0.8 million in accretion on the held-to-maturity investments. The primary use of cash was to fund our operations related to the development of our product candidates, costs associated with the Reverse Merger and the Pre-Closing Financing, and related severance and retention payments to former Neoleukin employees.

Previous wording

For the three months ended March 31, 2023, we used $13.6 million of cash in operating activities. Cash used in operating activities reflected our net loss of $12.3 million, a $2.6 million net decrease in our operating assets and liabilities, offset by noncash charges of $1.3 million, which consisted primarily of $0.8 million in depreciation and $0.3 million in stock-based compensation. The primary use of cash was to fund our operations related to the development of our product candidates.

Current wording

For the six months ended June 30, 2023, we used $22.9 million of cash in operating activities. Cash used in operating activities reflected our net loss of $24.1 million and a $1.4 million net decrease in our operating assets and liabilities, offset by noncash charges of $2.6 million, which consisted primarily of $1.6 million in depreciation and $0.7 million in stock-based compensation. The primary use of cash was to fund our operations related to the development of our product candidates.

Previous wording

For the three months ended March 31, 2024, net cash flows provided by investing activities consisted of proceeds from the maturities of investments of $30.0 million partially offset by purchases of property and equipment of $0.07 million.

Current wording

For thesix months ended June 30, 2024, net cash flows provided by investing activities consisted of proceeds from the maturities of investments of $49.5 million partially offset by purchases of investments of $42.7 million and purchases of property and equipment of $0.5 million.

Previous wording

For the three months ended March 31, 2023, net cash flows used in investing activities consisted of purchases of property and equipment of$0.03 million.

Current wording

For thesix months ended June 30, 2023, net cash flows used in investing activities consisted of purchases of property and equipment of$0.1 million.

Previous wording

For the three months ended March 31, 2024, net cash flows used in financing activities consisted of $4.3 million in offering costs paid in connection with the Pre-Closing Financing and $2.9 million in transaction costs related to the Reverse Merger, partially offset by proceeds of $0.6 million from the exercise of stock options.

Current wording

For the six months ended June 30, 2024, net cash flows used in financing activities consisted of $4.3 million in offering costs paid in connection with the Pre-Closing Financing and $2.9 million in transaction costs related to the Reverse Merger, partially offset by proceeds of $1.0 million from the exercise of stock options.

Previous wording

For the three months ended March 31, 2023, net cash flows provided by financing activities consisted of proceeds of $0.1 million from the exercise of stock options.

Current wording

For the six months ended June 30, 2023, net cash flows provided by financing activities consisted of proceeds of $0.1 million from the exercise of stock options.

Previous wording

In accordance with the terms of the Intellectual Property CVR within the CVR Agreement, we accrued approximately$0.6 million as a contingent consideration liability on our condensed consolidated balance sheet. The commitment relates to the Third Party Licensing Agreement. The liability in the condensed consolidated financial statements was $0.3 million, as it was reduced by approximately $0.3 million due to eligible expenses incurred that offset the liability. For more information on the Intellectual Property CVR, see Note 9, Commitments and Contingencies—Intellectual Property CVR, in the notes to the financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

In accordance with the terms of the Sales Tax CVR within the CVR Agreement, we accrued a contingent consideration liability on our condensed consolidated balance sheet. The terms of the CVR Agreement include that CVR holders are eligible to receive certain net proceeds derived from an anticipated sales tax refund from Washington state relating to tax returns filed by Neoleukin prior to Closing. The liability in the condensed consolidated financial statements was $0.3 million. For more information on the Sales Tax CVR, see Note 9, Commitments and Contingencies—Sales Tax CVR, in the notes to the financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

Our financial statements are prepared in accordance with U.S. GAAP. The preparation of the financial statements and related disclosures requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management evaluates estimates and assumptions on a periodic basis. Our actual results may differ from these estimates. A summary of our significant accounting policies is presented in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to our significant accounting policies during the three months ended March 31, 2024.

Current wording

Our financial statements are prepared in accordance with U.S. GAAP. The preparation of the financial statements and related disclosures requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management evaluates estimates and assumptions on a periodic basis. Our actual results may differ from these estimates. A summary of our significant accounting policies is presented in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to our significant accounting policies during thesix months ended June 30, 2024.