Voyager Therapeutics Inc

VOYAGER THERAPEUTICS INC.

NOTE****S TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of business

Voyager Therapeutics, Inc. (the “Company”) is a biotechnology company whose mission is to leverage the power of human genetics to modify the course of and ultimately cure neurological diseases. The Company’s pipeline includes programs for Alzheimer’s disease; amyotrophic lateral sclerosis; Parkinson’s disease, and multiple other diseases of the central nervous system. Many of the Company’s programs are derived from its TRACER™ adeno-associated virus (“AAV”) capsid discovery platform, which the Company has used to generate novel capsids (“TRACER Capsids”) and identify associated receptors to potentially enable high brain penetration with genetic medicines following intravenous dosing. Some of the Company’s programs are wholly-owned, and some are advancing with licensees and collaborators including Alexion, AstraZeneca Rare Disease; Novartis Pharma AG, (“Novartis”); and Neurocrine Biosciences, Inc. (“Neurocrine”).

The Company has a history of incurring annual net operating losses. As of September 30, 2024, the Company had an accumulated deficit of $291.7 million. The Company has not generated any product revenue and has financed its operations primarily through public offerings and private placements of its equity securities, funding from fees, option exercise payments, and milestone payments, and cost reimbursements associated with its prior and ongoing collaborations and license agreements.

As of September 30, 2024, the Company had cash, cash equivalents, and marketable securities of $345.4 million. Based upon the Company’s current operating plans, the Company expects that its existing cash, cash equivalents, and marketable securities at September 30, 2024 to be sufficient to meet the Company’s planned operating expenses and capital expenditure requirements for at least twelve months from the issuance of these consolidated financial statements.

There can be no assurance that the Company will be able to obtain additional debt or equity financing on terms acceptable to the Company or generate product revenue or revenue from collaboration partners, on a timely basis or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations, and financial condition.

2. Summary of significant accounting policies and basis of presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 as filed with the Securities and Exchange Commission (“SEC”) on February 28, 2024. These interim condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the periods presented. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification and Accounting Standards Updates of the Financial Accounting Standards Board.

Principles of Consolidation

The unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary as disclosed in Note 2, under the heading “Summary of Significant Accounting Policies and Basis of Presentation,” within the “Notes to Consolidated Financial Statements” accompanying the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, the Company’s management evaluates its estimates, which include, but are not limited to, estimates related to revenue recognition, incremental borrowing rate for leases, accrued expenses, stock-based compensation expense, and income taxes. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.

Summary of Significant Accounting Policies

There have been no changes in the Company's significant accounting policies as described in Note 2, “Summary of Significant Accounting Policies and Basis of Presentation,” within the “Notes to Consolidated Financial Statements” accompanying the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

3. Fair value measurements

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 are as follows:

The Company measures the fair value of money market funds, U.S. Treasury notes and U.S. Government agency securities based on quoted prices in active markets for identical securities. The Company measures the fair value of the Level 2 securities, certificates of deposit, corporate bonds and commercial paper based on recent trades of securities in active markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

4. Cash, cash equivalents, restricted cash, and available-for-sale marketable securities

Cash, cash equivalents, and marketable securities included the following at September 30, 2024 and December 31, 2023:

All of the Company’s marketable securities as of September 30, 2024 have a contractual maturity of one year or less.

The Company reviews investments whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. In connection with these investments, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors, considering the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss on the condensed consolidated balance sheet, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that is not related to credit is recognized in other comprehensive (loss) income. Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense in general and administrative expenses within the condensed consolidated statement of operations. Losses are charged against the allowance when the Company believes the uncollectability of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

The Company held $96.0 million and $44.2 million in marketable securities that were in an unrealized loss position as of September 30, 2024 and December 31, 2023, respectively. The unrealized losses at September 30, 2024 and December 31, 2023 were attributable to changes in interest rates and do not represent credit losses. The Company does not intend to sell these securities and it is not more likely than not that it will be required to sell them before recovery of their amortized cost basis.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:

5. Accrued expenses

Accrued expenses as of September 30, 2024 and December 31, 2023 consist of the following:

6. Lease obligation

Operating Leases

As of September 30, 2024, the Company has a lease for laboratory and office space at 75 Hayden Avenue in Lexington, Massachusetts through January 31, 2031 and a lease for additional office and laboratory space at 64 Sidney Street in Cambridge, Massachusetts (the “Cambridge Facility”) through November 30, 2026.

On August 11, 2023, the Company entered into a first amendment (the “First Amendment”) to its existing lease for laboratory and office space at 75 Hayden Avenue in Lexington, Massachusetts, pursuant to which the Company agreed to lease approximately 61,307 square feet of additional office and laboratory space through January 31, 2031. The Company received $1.8 million of leasehold improvement incentives associated with the First Amendment. The Company gained control of the space on February 1, 2024 and recorded a $26.7 million right-of-use asset and a $26.7 million operating lease liability, accordingly, which reflect the leasehold improvement incentive.

The Company’s lease agreements require the Company to maintain a cash deposit or irrevocable letter of credit in the aggregate amount of $2.9 million payable to its landlords as security for the performance of its obligations under the leases. These amounts are recorded as restricted cash and are included in deposits and other non-current assets in the accompanying condensed consolidated balance sheets.

In June 2024, the Company vacated its leased office and laboratory space in Cambridge, Massachusetts. The Company recorded an impairment charge of $2.8 million to operating expenses during the second quarter of 2024 as a result of the carrying value of the leased office and laboratory space asset group exceeding the undiscounted cash flows projected from a planned sublease of the facility. The impairment charge reduced the carrying value of the leased office and laboratory space asset group by $2.8 million. On August 2, 2024, the Company executed the sublease of the Cambridge Facility. Payments received under the sublease are included in other income in the condensed consolidated

statements of operations and comprehensive (loss) income. During the three and nine months ended September 30, 2024, the Company recognized $0.2 million of other income from its sublease of the Cambridge Facility.

During the three and nine months ended September 30, 2024, the Company incurred lease expenses of $1.9 million and $8.0 million, respectively. During the three and nine months ended September 30, 2023, the Company incurred lease expenses of $0.9 million and $2.7 million, respectively, for operating leases. As of September 30, 2024, the weighted average remaining lease term was 4.9 years and the weighted average incremental borrowing rate used to determine the operating lease liability was 6.8%.

7. Commitments, contingencies and other liabilities

As of September 30, 2024 and December 31, 2023, other current and non-current liabilities consisted of the following:

Other Agreements

In 2016, the Company entered into a research and development funding arrangement with a non-profit organization that provided up to $4.0 million in funding to the Company upon the achievement of clinical and development milestones. The agreement as amended in 2022 provides that the Company is obligated to repay amounts received under certain circumstances including termination of the agreement, and to pay an amount up to 2.6 times the funding received upon successful development and commercialization of any products developed. In 2017, the Company earned a milestone payment of $1.0 million. The Company evaluated the arrangement and concluded that it represents a research and development financing arrangement as it is probable that the Company will repay amounts received under the arrangement. As a result, the $1.0 million is recorded as a non-current liability in the condensed consolidated balance sheet.

Litigation

The Company was not a party to any material legal matters or claims as of September 30, 2024, or December 31, 2023. The Company did not have contingency reserves established for any litigation liabilities as of September 30, 2024, or December 31, 2023.

8. Significant agreements

The Company’s significant agreements are described in Note 9 of the December 31, 2023 consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023. During the three and nine months ended September 30, 2024, there were no material changes to the terms of the Company’s collaboration agreements with Neurocrine and the Company did not enter into any new collaboration or license agreements. On September 3, 2024, the Company entered into an amendment to its existing option and license agreement with Novartis dated March 4, 2022 (the “2022 Novartis Option and License Agreement”). The Company recorded collaboration revenue of $24.6 million and $4.6 million during the three months ended September 30, 2024 and 2023, respectively.

The Company recorded collaboration revenue of $73.7 million and $159.9 million during the nine months ended September 30, 2024 and 2023, respectively.

2022 Novartis Option and License Agreement

On September 3, 2024 (the “Amendment Effective Date”), the Company and Novartis entered into an amendment (the “Novartis Amendment”) to the 2022 Novartis Option and License Agreement. Pursuant to the Novartis Amendment, the Company and Novartis agreed to amend the 2022 Novartis Option and License Agreement to incorporate the grant from the Company to Novartis of an additional license (the “Novartis Direct License”) to a capsid discovered through the Company’s TRACER discovery platform (the “Novartis Direct Licensed Capsid”) for exclusive use with a certain gene (the “Novartis Direct License Target”) to develop and commercialize the Novartis Direct Licensed Capsid as incorporated into products containing a payload directed to the Novartis Direct License Target (“Novartis Direct Licensed Products”). As a result of the Novartis Amendment, the Novartis Direct License Target is now deemed a Licensed Target under the 2022 Novartis Option and License Agreement, as such term is defined therein, and the Novartis Direct License is subject to all other terms and conditions applicable to licenses granted to Novartis under the 2022 Novartis Option and License Agreement. Novartis agreed to pay to the Company a one-time fee of $15.0 million in consideration for the rights granted under the Novartis Amendment, which was received in October 2024. The Company evaluated the Novartis Amendment under ASC 606 and recorded $15.0 million as collaboration revenue in the three months ended September 30, 2024 since the consideration reflected the standalone selling price of the license that was delivered on the Novartis Amendment date, and there were no remaining undelivered performance obligations under the original 2022 Novartis Option and License Agreement. The Company is eligible to receive specified development, regulatory, and commercialization milestone payments of up to an aggregate of $130.0 million for the first Novartis Direct Licensed Product to achieve the corresponding milestone. On a Novartis Direct Licensed Product-by-Novartis Direct Licensed Product basis, the Company is also eligible to receive (a) specified sales milestone payments of up to an aggregate of $175.0 million per Novartis Direct Licensed Product and (b) tiered, escalating royalties in the mid- to high-single-digit percentages of annual net sales of each Novartis Direct Licensed Product.

2023 Neurocrine Collaboration Agreement

In April 2024, the Company announced that the joint steering committee with Neurocrine selected a development candidate for the glucocerebrosidase 1 gene therapy program for Parkinson’s disease and other GBA1-mediated diseases (the “GBA1 program”) under the collaboration and license agreement with Neurocrine entered into in January 2023 (the “2023 Neurocrine Collaboration Agreement”). The joint steering committee selection of a development candidate for the GBA1 Program triggered a $3.0 million milestone payment to the Company. The Company recorded the $3.0 million as collaboration revenue during the second quarter of 2024.

In September 2024, the Company announced that the joint steering committee with Neurocrine selected a development candidate in a gene therapy program for the potential treatment of an undisclosed neurological disease under the 2023 Neurocrine Collaboration Agreement, which triggered a $3.0 million milestone payment to the Company which was received in October 2024. The Company included the $3.0 million that had previously been constrained in the transaction price allocated to the program’s performance obligation in the three months ended September 30, 2024, accordingly, which resulted in a cumulative catch-up adjustment to collaboration revenue of approximately $2.0 million.

2023 Novartis Stock Purchase Agreement

Under the stock purchase agreement entered into in December 2023 (the “2023 Novartis Stock Purchase Agreement”), Novartis purchased 2,145,002 shares of common stock of the Company (the “Novartis Shares”) for an aggregate purchase price of approximately$20.0 million. The issuance of the Novartis Shares to Novartis pursuant to the 2023 Novartis Stock Purchase Agreement in January 2024 resulted in a premium of$0.7 million. The premium was allocated to the development and commercialization licenses granted to Novartis fortwo programs pursuant to the license and collaboration agreement with Novartis entered into in December 2023 and was recognized as collaboration revenue during the first quarter of 2024, upon the issuance of the Novartis Shares under the 2023 Novartis Stock Purchase Agreement.

2019 Neurocrine Collaboration Agreement

In February 2024, the Company announced that the joint steering committee with Neurocrine selected a lead development candidate for the gene therapy program for Friedreich’s ataxia (the “FA Program”) under the collaboration and license agreement with Neurocrine entered into in January 2019 (the “2019 Neurocrine Collaboration Agreement”), which triggered a $5.0 million milestone payment to the Company that was received in the first quarter of 2024. The Company included the $5.0 million that had previously been constrained in the transaction price allocated to the FA Program performance obligation in the three months ended March 31, 2024, accordingly, which resulted in a cumulative catch-up adjustment to collaboration revenue of $4.4 million.

Related Party Collaboration Receivable

The following table presents changes in the balances of the Company’s related party collaboration receivable and contract liabilities for the 2023 Neurocrine Collaboration Agreement and the 2019 Neurocrine Collaboration Agreement during the nine months ended September 30, 2024:

The change in the related party collaboration receivable balance for the nine months ended September 30, 2024 is primarily driven by amounts owed to the Company for research and development services provided, offset by amounts collected during the period, for the 2023 and 2019 Neurocrine Collaboration Agreements. Deferred revenue activity for the period includes the recording of $1.6 million of deferred revenue during the nine months ended September 30, 2024 related to fixed transaction price allocation increases, offset by $42.1 million of collaboration revenue recognized on the proportional performance model during the period for the 2023 and 2019 Neurocrine Collaboration Agreements, which is classified as either current or non-current in the accompanying consolidated balance sheet based on the period the services are expected to be delivered.

9. Stock-based compensation

Stock-Based Compensation Expense

Total compensation cost recognized for all stock-based compensation awards in the condensed consolidated statements of operations and comprehensive (loss) income was as follows:

Stock-based compensation expense by type of award included within the condensed consolidated statements of operations and comprehensive (loss) income was as follows:

Restricted Stock Units

A summary of the status of and changes in unvested restricted stock unit activity under the Company’s equity award plans for the nine months ended September 30, 2024 was as follows:

Stock-based compensation of restricted stock units is based on the fair value of the Company’s common stock on the date of grant and is recognized over the vesting period. All of the restricted stock units granted in the nine months ended September 30, 2024 vest in equal amounts, annually over three years. The stock-based compensation expense related to restricted stock units was $1.0 million and $3.5 million for the three and nine months ended September 30, 2024, respectively. The stock-based compensation expense related to restricted stock units was $0.8 million and $2.3 million for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, the Company had unrecognized stock-based compensation expense related to its unvested restricted stock units of $9.1 million, which is expected to be recognized over the remaining average vesting period of 2.1 years.

Stock Options

The following is a summary of stock option activity for the nine months ended September 30, 2024:

As of September 30, 2024, the Company had unrecognized stock-based compensation expense related to its unvested stock options of $20.1 million which is expected to be recognized over the remaining weighted-average vesting period of 2.7 years.

10. Net (loss) income per share

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net (loss) income per share because to include them would be anti-dilutive:

Basic and dilutednet (loss) income per share and diluted weighted-average shares outstanding are as follows for the three and nine months ended September 30, 2024 and 2023:

The pre-funded warrants issued in connection with the underwritten public offering discussed in Note 11 are included in basic and diluted weighted average shares outstanding for the three and nine months ended September 30, 2024.

11. Underwritten public offering

On January 4, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Citigroup Global Markets Inc. and Guggenheim Securities, LLC, as representatives of the several underwriters named therein (the “Underwriters”), relating to an underwritten public offering of 7,777,778 shares of the Company’s common stock, par value $0.001 per share, and, in lieu of common stock to certain investors, pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 3,333,333 shares of common stock. The Underwriters agreed to purchase the Company’s stock from the Company pursuant to the Underwriting Agreement at a price of $8.46 and the Pre-Funded Warrants from the Company pursuant to the Underwriting Agreement at a price of $8.459 per share underlying each Pre-Funded Warrant.

On January 9, 2024, the Company issued 7,777,778 shares of common stock and 3,333,333 Pre-Funded Warrants for net proceeds of approximately $93.5 million after deducting underwriting discounts and commissions and offering expenses pursuant to the underwritten public offering. The Pre-Funded Warrants met the equity classification guidance and therefore are classified as stockholders’ equity.

12. Related-party transactions

During the three and nine months ended September 30, 2024, the Company received scientific advisory board and other scientific advisory services from Dinah Sah, Ph.D., the Company’s former Chief Scientific Officer. The total amount of fees paid to Dr. Sah for services provided during the three and nine months ended September 30, 2024, was $150,000 and $450,000, respectively. The total amount of fees paid to Dr. Sah for services provided during the three and nine months ended September 30, 2023 was $157,500 and $541,300, respectively. During the second quarter of 2023, the Company and Dr. Sah agreed to a fee of $50,000 per month for advisory services from Dr. Sah pursuant to an amendment to the Company’s consulting agreement with Dr. Sah that became effective in June 2023.

Under each of the Company’s collaboration agreements with Neurocrine, the Company and Neurocrine have agreed to conduct research, development, and commercialization activities for certain of the Company’s AAV gene therapy product candidates. Amounts due from Neurocrine are reflected as related party collaboration receivables. As of September 30, 2024, the Company had approximately $3.3 million in related party collaboration receivables associated with the 2023 Neurocrine Collaboration Agreement and approximately $0.4 million in related party collaboration receivables associated with the 2019 Neurocrine Collaboration Agreement.