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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of October ~~28, 2021,~~27, 2022, there were ~~42,769,208~~43,293,631 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These statements express a belief, expectation or intention and are generally accompanied by words that convey projected future events or outcomes such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “assume,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would” or by variations of such words or by similar expressions. We have based these forward-looking statements on our current expectations and assumptions and analyses in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, uncertainties, assumptions and other important factors, including, but not limited to:

You should carefully read the factors discussed in the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and in our other filings with the U.S. Securities and Exchange Commission (the SEC) for additional discussion of the risks, uncertainties, assumptions and other important factors that could cause our actual results or developments to differ materially and adversely from those projected in the forward-looking statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on us or our businesses or operations. Such statements are not guarantees of future performance and actual results or developments may differ materially and adversely from those projected in the forward-looking statements. These forward-looking statements speak only as of the date of this report. Except as required by law, we disclaim any duty to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Our principal offices are located at 9804 Medical Center Drive, Rockville, MD 20850, and our telephone number is (240) 552-8181. Our website address is www.regenxbio.com. The information contained in, or that can be accessed through, our website is not a part of, or incorporated by reference in, this Quarterly Report on Form 10-Q. We file annual, quarterly, and current reports, proxy statements, and other documents with the SEC under the Exchange Act. You may obtain any reports, proxy and information statements, and other information that we file electronically with the SEC at www.sec.gov.

You also may view and download copies of our SEC filings free of charge at our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information contained on, or that can be accessed through, our website will not be deemed to be incorporated by reference in, and is not considered part of, this Quarterly Report on Form ~~10-Q~~. 10-Q. Investors should also note that we use our website, as well as SEC filings, press releases, public conference calls and webcasts, to announce financial information and other material developments regarding our business. We use these channels, as well as any social media channels listed on our website, to communicate with investors and members of the public about our business. It is possible that the information that we post on our social media channels could be deemed material information. Therefore, we encourage investors, the media and others interested in our company to review the information that we post on our social media channels.

As used in this Quarterly Report on Form 10-Q, the terms “REGENXBIO,” “we,” “us,” “our” or the “Company” mean REGENXBIO Inc. and its subsidiaries, on a consolidated basis, unless the context indicates otherwise.

AAVIATE, ALTITUDE, ATMOSPHERE, NAV, REGENXBIO and the REGENXBIO logos are our registered trademarks. Any other trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3. Marketable Securities

The following tables present a summary of the Company’s marketable securities, which consist solely of available-for-sale debt securities (in thousands):

Amortized Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

September 30, 2021

U.S. government and federal agency securities

$
25,003

$
—

$
(23
)

$
24,980

Certificates of deposit

2,939

10

(1
)

2,948

Corporate bonds

274,592

41

(452
)

274,181

Municipal securities

3,004

—

—

3,004

$
305,538

$
51

$
(476
)

$
305,113


	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
September 30, 2022
U.S. government and agency securities	$	150,504	$	—	$	(4,028	)	$	146,476
Certificates of deposit		5,129		—		(206	)		4,923
Corporate bonds		360,233		—		(13,164	)		347,069
	$	515,866	$	—	$	(17,398	)	$	498,468

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	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
December 31, 2021
U.S. government and agency securities	$	60,118	$	—	$	(229	)	$	59,889
Certificates of deposit		2,936		2		(11	)		2,927
Corporate bonds		442,792		62		(1,533	)		441,321
	$	505,846	$	64	$	(1,773	)	$	504,137

Amortized Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

December 31, 2020

U.S. government and federal agency securities

$
12,782

$
22

$
—

$
12,804

Certificates of deposit

1,956

34

—

1,990

Corporate bonds

165,850

497

(55
)

166,292

Municipal securities

3,035

2

—

3,037

$
183,623

$
555

$
(55
)

$
184,123

As of September 30, ~~2021~~2022 and December 31, ~~2020, 0~~2021, no available-for-sale debt securities had remaining maturities greater than three years. The amortized cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, or to the earliest call date for callable debt securities purchased at a premium.

~~Table of Contents~~

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the balance in ~~the Company’s~~ accumulated other comprehensive loss consisted solely of unrealized gains and losses on available-for-sale debt securities, net of reclassification adjustments for realized gains and losses and income tax effects. The Company uses the aggregate portfolio approach to release the tax effects of unrealized gains and losses on available-for-sale debt securities in accumulated other comprehensive loss. Realized gains and losses from the sale or maturity of marketable securities are based on the specific identification method and are included in results of operations as investment ~~income (loss)~~income. . Unrealized ~~gain (loss)~~loss on available-for-sale securities, net, as presented in the consolidated statements of operations and comprehensive ~~income (loss)~~loss consisted of the following (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Unrealized gain (loss) before reclassifications

$
(30
)

$
(457
)

$
(918
)

$
108

Realized gains reclassified to investment income (loss)

—

(30
)

(7
)

(50
)
Income tax expense

—

—

—

—

Unrealized gain (loss) on available-for-sale
securities, net

$
(30
)

$
(487
)

$
(925
)

$
58


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Unrealized loss before reclassifications	$	(3,493	)	$	(30	)	$	(15,759	)	$	(918	)
Realized losses (gains) reclassified to investment income		—			—			72			(7	)
Income tax expense		—			—			—			—
Unrealized loss on available-for-sale securities, net	$	(3,493	)	$	(30	)	$	(15,687	)	$	(925	)

The following tables present the fair values and unrealized losses of available-for-sale debt securities held by the Company in an unrealized loss position for less than 12 months and 12 months or greater (in thousands):

	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Less than 12 Months					12 Months or Greater					Total
September 30, 2021
U.S. government and federal agency securities	$	17,444	$	(23	)	$	—	$	—	$	17,444	$	(23	)
															Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2022
U.S. government and agency securities															$	132,182	$	(3,334	)	$	14,294	$	(694	)	$	146,476	$	(4,028	)
Certificates of deposit		489		(1	)		—		—		489		(1	)		4,202		(191	)		475		(15	)		4,677		(206	)
Corporate bonds		238,835		(452	)		—		—		238,835		(452	)		221,811		(9,624	)		125,258		(3,540	)		347,069		(13,164	)
	$	256,768	$	(476	)	$	—	$	—	$	256,768	$	(476	)	$	358,195	$	(13,149	)	$	140,027	$	(4,249	)	$	498,222	$	(17,398	)


	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2021
U.S. government and agency securities	$	59,889	$	(229	)	$	—	$	—	$	59,889	$	(229	)
Certificates of deposit		2,195		(11	)		—		—		2,195		(11	)
Corporate bonds		385,115		(1,533	)		—		—		385,115		(1,533	)
	$	447,199	$	(1,773	)	$	—	$	—	$	447,199	$	(1,773	)

Less than 12 Months

12 Months or Greater

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

December 31, 2020

Corporate bonds

$
55,507

$
(55
)

$
—

$
—

$
55,507

$
(55
)

$
55,507

$
(55
)

$
—

$
—

$
55,507

$
(55
)

As of September 30, ~~2021,~~2022, available-for-sale debt securities held by the Company which were in an unrealized loss position consisted of 47136 investment grade security positions. The Company has the intent and ability to hold such securities until recovery, and based on the credit quality of the issuers and low severity of each unrealized loss position relative to its amortized cost basis, the Company did not identify any credit losses associated with its available-for-sale debt securities. The Company did 0tnot record an allowance for credit losses on its available-for-sale debt securities as of September 30, ~~2021~~2022 or December 31, ~~2020.~~2021. The Company did 0tnot recognize any impairment or credit losses on available-for-sale debt securities during the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

During the three and nine months ended September 30, 2020, the Company recognized total net realized and unrealized losses of $7.5 million and $8.3 million, respectively, related to its marketable equity securities of Prevail Therapeutics Inc. (Prevail), which were acquired as consideration for a license to the NAV Technology Platform granted to Prevail in August 2017. As of December 31, 2020, the Company had sold all of its Prevail equity securities.

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4. Fair Value of Financial Instruments

Financial instruments reported at fair value on a recurring basis include cash equivalents and marketable securities. The following tables present the fair value of cash equivalents and marketable securities in accordance with the hierarchy discussed in Note 2 (in thousands):


	Quoted		Significant
	prices		other		Significant
	in active		observable		unobservable
	markets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total
September 30, 2022
Cash equivalents:
Money market mutual funds	$	—	$	59,655	$	—	$	59,655
U.S. government and agency securities		—		19,979		—		19,979
Total cash equivalents		—		79,634		—		79,634
Marketable securities:
U.S. government and agency securities		—		146,476		—		146,476
Certificates of deposit		—		4,923		—		4,923
Corporate bonds		—		347,069		—		347,069
Total marketable securities		—		498,468		—		498,468
Total cash equivalents and marketable securities	$	—	$	578,102	$	—	$	578,102


	Quoted		Significant
	prices		other		Significant
	in active		observable		unobservable
	markets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total
December 31, 2021
Cash equivalents:
Money market mutual funds	$	—	$	236,340	$	—	$	236,340
Total cash equivalents		—		236,340		—		236,340
Marketable securities:
U.S. government and agency securities		—		59,889		—		59,889
Certificates of deposit		—		2,927		—		2,927
Corporate bonds		—		441,321		—		441,321
Total marketable securities		—		504,137		—		504,137
Total cash equivalents and marketable securities	$	—	$	740,477	$	—	$	740,477

Quoted

Significant

prices

other

Significant

in active

observable

unobservable

markets

inputs

inputs

(Level 1)

(Level 2)

(Level 3)

Total

September 30, 2021

Cash equivalents:

Money market mutual funds

$
—

$
187,123

$
—

$
187,123

Total cash equivalents

—

187,123

—

187,123

Marketable securities:

U.S. government and federal agency securities

—

24,980

—

24,980

Certificates of deposit

—

2,948

—

2,948

Corporate bonds

—

274,181

—

274,181

Municipal securities

—

3,004

—

3,004

Total marketable securities

—

305,113

—

305,113

Total cash equivalents and marketable securities

$
—

$
492,236

$
—

$
492,236

Quoted

Significant

prices

other

Significant

in active

observable

unobservable

markets

inputs

inputs

(Level 1)

(Level 2)

(Level 3)

Total

December 31, 2020

Cash equivalents:

Money market mutual funds

$
—

$
96,307

$
—

$
96,307

Total cash equivalents

—

96,307

—

96,307

Marketable securities:

U.S. government and federal agency securities

—

12,804

—

12,804

Certificates of deposit

—

1,990

—

1,990

Corporate bonds

—

166,292

—

166,292

Municipal securities

—

3,037

—

3,037

Total marketable securities

—

184,123

—

184,123

Total cash equivalents and marketable securities

$
—

$
280,430

$
—

$
280,430

Management estimates that the carrying ~~amounts~~values of its current accounts receivable, other current assets, accounts payable, ~~and~~ accrued expenses and other current liabilities approximate fair value due to the short-term nature of those instruments. Accounts receivable which contain non-current portions and certain non-current payables reported as other liabilities are recorded at their present values using a discount rate that is based on prevailing market rates ~~and the credit profile of the licensee~~ on the date the amounts ~~are~~were initially recorded. Management does not believe there have been any significant changes in market conditions or credit quality that would cause the discount rates initially used to be materially different from those that would be used as of September 30, ~~2021~~2022 to determine the present value of ~~the receivables.~~these receivables and liabilities. Accordingly, management estimates that the carrying ~~value~~values of its non-current accounts receivable ~~approximates~~and other liabilities approximate the fair value of those instruments. Management estimates that the carrying value of the liability related to the sale of future royalties approximates fair value. As discussed in Note 6, the carrying value of the liability related to the sale of future royalties is based on the Company’s estimate of future royalties expected to be paid to HCR over the life of the arrangement, which are considered Level 3 inputs.

Non-marketable Equity Securities

Non-marketable equity securities are measured at cost less impairment, adjusted for observable price changes for identical or similar investments of the same issuer. As of September 30, 2022 and December 31, 2021, the Company did 0tnot hold any non-marketable equity securities. As of December 31, 2020, non-marketable equity securities had a carrying value of $1.1 million and were included in other assets on the consolidated balance sheet. The Company did not identify any observable price changes or changes in circumstances that would have had an adverse effect on the fair value of the securities as of December 31, 2020. NaNNo remeasurements or impairment losses were recorded on non-marketable equity securities during the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

Table of Contents

The ~~Company’s~~Company held non-marketable ~~equity securities as of December 31, 2020 consisted solely of~~ equity securities of Corlieve Therapeutics SAS (Corlieve)~~, which~~ prior to the acquisition of Corlieve by uniQure N.V. (uniQure) in July 2021. The securities were acquired by the Company in June 2020 as consideration under a license and collaboration agreement with Corlieve. InAs a result of the acquisition of Corlieve by uniQure in July 2021, ~~Corlieve was acquired by~~the Company received total proceeds of €5.3 million ($6.1 million) from uniQure ~~N.V. (uniQure). In~~in exchange for its ownership in Corlieve, of which $5.6 million was received upon the closing of the acquisition and $0.5 million was received in August 2022 upon the expiration of a hold back period. The Company ~~received proceeds~~recorded a realized gain of ~~€4.8~~$5.2 million ~~($5.6 million) from uniQure and is entitled to receive additional proceeds of €0.6 million ($0.6 million as of September 30, 2021) by July 2022. During~~during the three and nine months ended September 30, 2021 ~~the Company recorded a realized gain of $5.2 million~~ as a result of the acquisition of its Corlieve securities by uniQure, which is included in investment income ~~(loss)~~ in the consolidated statements of operations and comprehensive ~~income (loss).~~loss. In connection with the acquisition, the Company is also eligible to receive payments of up to ~~€37.1~~€37.1 million ($~~43.2~~36.2 million as of September 30, ~~2021)~~2022) from uniQure contingent upon the achievement of various development and regulatory milestones, none of which have been recognized in the consolidated financial statements as of September 30, ~~2021.~~2022. Proceeds contingent upon the achievement of these milestones will be recognized as investment income in the period in which any uncertainty regarding realization is substantially resolved, which may not occur until the achievement of the underlying milestones. It is at least reasonably possible that some or all of the proceeds contingent upon these milestones will not be realized by the Company.

5. Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):


	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
Laboratory and manufacturing equipment	$	49,951		$	26,306		$	68,899		$	56,976
Computer equipment and software		4,070			3,764			4,823			4,268
Furniture and fixtures		6,515			4,114			6,944			6,804
Leasehold improvements		88,131			44,957			97,502			92,535
Total property and equipment		148,667			79,141			178,168			160,583
Accumulated depreciation and amortization		(26,436	)		(22,674	)		(37,262	)		(29,036	)
Property and equipment, net	$	122,231		$	56,467		$	140,906		$	131,547

6. Liability Related to Sale of Future Royalties

In December 2020, the Company entered into a royalty purchase agreement (the Royalty Purchase Agreement) with entities managed by Healthcare Royalty Management, LLC (collectively, HCR). Under the agreement, HCR purchased the Company’s rights to a capped amount of Zolgensma royalty payments under the Company’s license agreement (the Novartis License) with Novartis Gene Therapies, Inc. (formerly AveXis, Inc.) (Novartis Gene Therapies), including ~~$4.0~~$4.0 million of royalty payments received by the Company in the fourth quarter of 2020 (the Pledged Royalties). In consideration for these rights, HCR paid the Company ~~$200.0~~$200.0 million (the Purchase Price), less $4.0 million representing the payment of the Pledged Royalties to HCR. Beginning upon the effective date of the ~~agreement,~~Royalty Purchase Payment, Zolgensma royalty payments, up to a specified threshold, ~~will~~shall be paid to HCR, net of upstream royalties payable by the Company to certain licensors in accordance with existing license agreements.

Pursuant to the Royalty Purchase Agreement, the total amount of royalty payments to be received by HCR under the agreement is subject to an increasing cap (the Cap Amount) equal to (i) ~~$260.0~~$260.0 million applicable for the period from the effective date of the ~~agreement~~Royalty Purchase Agreement through November 7, 2024, and (ii) ~~$300.0~~$300.0 million applicable for the period from November 8, 2024 through the effective date of termination of the ~~license agreement with~~ Novartis ~~Gene Therapies.~~License. If, on or prior to the defined dates for each Cap Amount, the total amount of royalty payments received by HCR equals or exceeds the Cap Amount applicable to such date, the Royalty Purchase Agreement will automatically terminate and all rights to the Zolgensma royalty payments will revert back to the Company. The Company has no obligation to repay any amounts to HCR if total future Zolgensma royalty payments are not sufficient to achieve the applicable Cap Amount prior to the termination of the ~~license agreement with~~ Novartis ~~Gene Therapies.~~License.

The Company has a call option to repurchase its rights to the purchased royalties from HCR for a repurchase price equal to, as of the option exercise date, ~~$300.0~~$300.0 million minus the total amount of royalty payments received by HCR; provided, however, that with respect to a call option exercised on or before November 7, 2024, in the event that the then applicable Cap Amount minus the total amount of royalty payments received by HCR is less than ~~$1.0~~$1.0 million, the repurchase price shall equal such difference.

The proceeds received from HCR of ~~$196.0~~$196.0 million were recorded as a liability, net of transaction costs of ~~$3.5~~$3.5 million, which is amortized over the estimated life of the arrangement using the effective interest method. In order to determine the amortization of the liability, the Company is required to estimate the total amount of future royalty payments to be received by HCR, subject to the Cap Amount, over the life of the arrangement. The total amount of royalty payments received by HCR under the ~~agreement,~~Royalty Purchase Agreement, less the net proceeds received by the Company of ~~$192.5~~$192.5 million, is recorded as ~~non-cash~~ interest expense over the life of the arrangement using the effective interest method. Due to its continuing involvement in the underlying ~~license agreement with~~ Novartis ~~Gene Therapies,~~License, the Company

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continues to recognize royalty revenue on net sales of Zolgensma and records the royalty payments to HCR as a reduction of the liability when paid. As such payments are made to HCR, the balance of the liability will be effectively repaid over the life of the Royalty Purchase Agreement.

~~Table of Contents~~

The Company estimates the effective interest rate used to record ~~non-cash~~ interest expense under the Royalty Purchase Agreement based on its estimate of future royalty payments to be received by HCR. As of September 30, ~~2021,~~2022, the estimated effective interest rate under the ~~agreement~~Royalty Purchase Agreement was ~~14.9%~~15.4%. Over the life of the arrangement, the actual effective interest rate will be affected by the amount and timing of the royalty payments received by HCR and changes in the Company’s forecasted royalties. At each reporting date, the Company reassesses its estimate of total future royalty payments to be received by HCR at the applicable Cap Amount, and prospectively adjusts the effective interest rate and amortization of the liability, as necessary.

The following table presents the changes in the liability related to the sale of future royalties under the Royalty Purchase Agreement with HCR (in thousands):

	Nine Months Ended
	September 30, 2021			Liability Related to
Liability related to sale of future royalties, beginning balance	$	193,298
				Sale of Future Royalties
Balance at December 31, 2021				$	171,349
Zolgensma royalties paid to HCR		(33,252	)		(42,317	)
Non-cash interest expense		19,777
Liability related to sale of future royalties, ending balance		179,823
Interest expense recognized					18,417
Balance at September 30, 2022					147,449
Current portion of liability related to sale of future royalties		(35,508	)		(44,365	)
Liability related to sale of future royalties, non-current	$	144,315		$	103,084

7. ~~Capitalization~~Commitments and Contingencies

The Trustees of the University of Pennsylvania

In ~~January 2021,~~February 2009, the Company ~~completed~~entered into a ~~public offering~~license agreement, which has been amended from time to time, with The Trustees of ~~4,899,000 shares~~the University of ~~its common stock (inclusive~~Pennsylvania (together with the University of ~~639,000 shares~~Pennsylvania, Penn) (the Penn License) for exclusive, worldwide rights to certain patents owned by Penn underlying the Company’s NAV Technology Platform, as well as exclusive rights to certain data, results and other information. In March 2022, the Company and Penn entered into a letter agreement (the Penn Letter Agreement) pursuant to which the ~~full exercise~~Company will pay to Penn a total of $20.0 million, consisting of (i) $8.0 million to satisfy payment of any sublicense fees due or owed in the future under the Penn License as a result of the Company’s collaboration and license agreement with AbbVie Global Enterprises Ltd., which was payable within 30 days of the effective date of the Penn Letter Agreement, and (ii) $12.0 million to satisfy any other past or future obligations of the Company to pay sublicense fees under the Penn License, which is payable in four equal annual installments of $3.0 million beginning on the first anniversary of the effective date of the Penn Letter Agreement. The Penn Letter Agreement amended the Penn License to remove the Company’s obligations to pay sublicense fees under the Penn License. The Company will continue to be obligated to pay Penn royalties on net sales of licensed products, milestone fees and reimbursement of certain patent maintenance costs in accordance with the Penn License.

In connection with the execution of the Penn Letter Agreement, the Company’s royalty obligations under its March 2009 license agreement with GlaxoSmithKline LLC (GSK) (the GSK License) were assigned by GSK to Penn. Beginning upon the ~~underwriters~~effective date of ~~their option to purchase additional shares) at a price of $47.00 per share. The aggregate net proceeds received~~the Penn Letter Agreement in March 2022, any royalties payable by the Company ~~from~~under the ~~offering, inclusive~~GSK License will be paid to Penn rather than GSK. The Company will continue to be obligated to pay GSK sublicense fees and reimbursement of certain patent maintenance costs in accordance with the GSK License.

The Company recognized a charge of $9.2 million as cost of revenues upon the execution of Penn Letter Agreement in March 2022, which consisted of $17.3 million representing the present value of the ~~underwriters’ option exercise, were $216.1~~$20.0 million payable under the Penn Letter Agreement, less $8.1 million in sublicense fees previously recognized as expense by the Company in prior periods and accrued as liabilities prior to the effectiveness of the Penn Letter Agreement. The present value discount is accreted as interest expense over the contractual payment period using the effective interest method. In addition to other amounts payable under the Penn License, as of September 30, 2022, the Company had recorded a total of $9.9 million payable to Penn under the Penn Letter Agreement, net of ~~underwriting discounts~~present value discount, of which $2.1 million was included in accrued expenses and ~~commissions~~other current liabilities and ~~offering expenses payable by~~$7.8 million was included in other liabilities on the ~~Company.~~consolidated balance sheet.

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8. License and Collaboration Agreements

License and Royalty Revenue

As of September 30, ~~2021,~~2022, the Company’s NAV Technology Platform was being applied by NAV Technology Licensees in 1one commercially available product, Zolgensma, and in the development of ~~20 other~~a number of licensed products. Additionally, the Company has licensed intellectual property rights to collaborators for the joint development of certain product candidates. Consideration to the Company under its license agreements may include: (i) up-front and annual fees, (ii) ~~option fees to acquire additional licenses, (iii)~~ milestone payments based on the achievement of certain development and sales-based milestones, ~~by licensees, (iv)~~(iii) sublicense fees, ~~and (v)~~(iv) royalties on sales of licensed ~~products.~~products and (v) other consideration payable upon optional goods and services purchased by licensees. Sublicense fees vary by license and range from a mid-single digit percentage to a low-double digit percentage of license fees received by licensees as a result of sublicenses. Royalties on net sales of commercialized products vary by license and range from a mid-single digit percentage to a low double-digit percentage of net sales by licensees.

~~Development~~License and royalty revenue consisted of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Zolgensma royalties	$	25,205	$	30,254	$	75,130	$	66,946
Other license and royalty revenue		1,307		519		6,249		4,746
Total license and royalty revenue	$	26,512	$	30,773	$	81,379	$	71,692

Outstanding development milestone payments are evaluated each reporting period and are only included in the transaction price of each license and recognized as license revenue to the extent the milestones are considered probable of achievement. Sales-based milestones are excluded from the transaction price of each license agreement and recognized as royalty revenue in the period of achievement. As of September 30, ~~2021,~~2022, the Company’s license agreements, excluding additional licenses that could be granted upon the exercise of options by licensees, contained unachieved milestones which could result in aggregate milestone payments to the Company of up to ~~$194.8 million,~~$1.57 billion, including (i) ~~$23.3~~$537.8 million upon the commencement of various stages of clinical trials, (ii) ~~$21.0~~$19.0 million upon the submission of regulatory approval filings, (iii) ~~$93.5~~$136.0 million upon the approval of commercial products by regulatory agencies and (iv) ~~$57.0~~$877.0 million upon the achievement of specified sales targets for licensed products, including milestones payable upon the first commercial sales of licensed products. To the extent the milestone payments are realized by the Company, the Company will be obligated to pay sublicense fees to licensors based on a specified percentage of the fees earned by the Company. The achievement of these milestones ~~by licensees~~ is highly dependent on the successful development and commercialization of licensed products and it is at least reasonably possible that some or all of the milestone fees will not be realized by the Company.

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Changes in Accounts Receivable, Contract Assets and Deferred Revenue

The following table presents changes in the balances of the Company’s net accounts receivable, contract assets and deferred revenue, as well as other information regarding revenue recognized during the periods presented (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Accounts receivable, net, current and non-current:
Balance, beginning of period	$	47,202		$	46,494		$	46,266		$	42,303		$	39,534		$	47,202		$	34,701		$	46,266
Additions		30,385			100,243			71,544			137,220			31,279			30,385			99,685			71,544
Deductions		(28,840	)		(21,057	)		(69,063	)		(53,843	)		(36,461	)		(28,840	)		(100,034	)		(69,063	)
Balance, end of period	$	48,747		$	125,680		$	48,747		$	125,680		$	34,352		$	48,747		$	34,352		$	48,747

Contract assets:
Balance, beginning of period	$	702		$	350		$	350		$	—		$	—		$	702		$	1,074		$	350
Additions		407			—			1,109			350			—			407			1,256			1,109
Deductions		—			—			(350	)		—			—			—			(2,330	)		(350	)
Balance, end of period	$	1,109		$	350		$	1,109		$	350		$	—		$	1,109		$	—		$	1,109

Deferred revenue, current and non-current:
Balance, beginning of period	$	4,025		$	4,457		$	4,232		$	3,333		$	6,636		$	4,025		$	3,333		$	4,232
Additions		—			—			—			1,124			610			—			4,330			—
Deductions		(99	)		(113	)		(306	)		(113	)		(1,343	)		(99	)		(1,760	)		(306	)
Balance, end of period	$	3,926		$	4,344		$	3,926		$	4,344		$	5,903		$	3,926		$	5,903		$	3,926

Revenue recognized during the period from:
Amounts included in deferred revenue at beginning of period	$	99		$	113		$	306		$	—		$	1,343		$	99		$	—		$	306
Performance obligations satisfied in previous periods	$	30,256		$	98,799		$	70,603		$	125,555		$	25,169		$	30,256		$	75,130		$	70,603

Additions to accounts receivable during the periods presented consisted primarily of ~~receivables recorded related to~~ royalties on net sales of Zolgensma and receivables recorded in relation to new licenses granted by the Company, ~~the achievement of~~ development ~~and sales-based~~ milestones achieved by licensees, the performance of research and ~~interest income from licensing recognized during~~development services by the ~~period.~~Company, and amounts billed to collaborators for reimbursement of collaboration activities. Deductions to accounts receivable during the periods presented consisted primarily of amounts collected from licensees and ~~increases in the allowance for credit losses, as discussed further below.~~collaborators. Additions to contract assets during the periods presented consisted ~~primarily~~ of development milestones deemed probable of achievement by licensees during the ~~period.~~period and revenue recognized from research and development services performed by the Company for which payment by the licensee is not unconditional. Deductions to contract assets during the periods presented consisted of amounts billed to licensees for the achievement of ~~such~~development milestones previously deemed probable of achievement and the billing of amounts recognized as revenue for the ~~associated milestone payments by~~performance of research and development services for which payment is no longer conditional. Contract assets recorded as of December 31, 2021 are included in other current assets on the ~~Company.~~consolidated balance sheet. The Company did not record any contract assets as of September 30, 2022.

As of September 30, ~~2021,~~2022, the Company had recorded deferred revenue of ~~$3.9~~$5.9 million which represents consideration received or unconditionally due from licensees for performance obligations that have not yet been satisfied by the Company. Unsatisfied performance obligations consisted of (i) options granted to licensees that provide a material ~~rights to the licensee~~right to acquire additional licenses from the Company, which will be satisfied upon the exercise or expiration of the options and (ii) research and development services to be performed by the Company related to licensed products, which will be satisfied as the research and development services are performed. As of September 30, 2022, the aggregate transaction price of the Company’s license agreements allocated to performance obligations not yet satisfied, or partially satisfied, was $7.7 million, which is expected to be satisfied over a period of two to three years.

Revenue recognized from performance obligations satisfied in previous periods was primarily attributable to Zolgensma ~~royalty revenues, the achievement of sales-based milestones for net sales of Zolgensma, sublicense fees earned from licensees~~royalties and changes in the transaction prices of the Company’s license agreements. Changes in transaction prices were primarily attributable to development milestones achieved or deemed probable of achievement during the periods, which were previously not considered probable of achievement.

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Accounts Receivable, Contract Assets and the Allowance for Credit Losses

Accounts receivable, net consisted of the following (in thousands):


	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
Current accounts receivable:
Billed to customers	$	30,248		$	30,573		$	150		$	365
Unbilled		28,979			20,104			32,399			32,074
Allowance for credit losses		(13,210	)		(7,678	)		—			—
Current accounts receivable, net		46,017			42,999			32,549			32,439
Non-current accounts receivable:
Unbilled		2,730			3,267			5,853			6,020
Allowance for credit losses		—			—			(4,050	)		(3,758	)
Non-current accounts receivable, net		2,730			3,267			1,803			2,262
Total accounts receivable, net	$	48,747		$	46,266		$	34,352		$	34,701

The following table presents the changes in the allowance for credit losses related to accounts receivable and contract assets for the nine months ended September 30, ~~2021~~2022 (in thousands):

	Accounts Receivable		Contract Assets
Balance at December 31, 2020	$	7,678	$	—
					Allowance for Credit Losses
					Accounts Receivable		Contract Assets
Balance at December 31, 2021					$	3,758	$	—
Provision for credit losses		5,532		—		—		—
Changes in present value discount of receivables						292		—
Write-offs		—		—		—		—
Balance at September 30, 2021	$	13,210	$	—
Balance at September 30, 2022					$	4,050	$	—

The Company’s allowance for credit losses as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 was related solely to accounts receivable from Abeona Therapeutics Inc. (Abeona). Please refer to the section below, Settlement Agreement with Abeona Therapeutics, ~~Inc.,~~ for further information regarding amounts due from Abeona and the associated allowance for credit losses. The Company’s provision for credit losses was ~~$5.0~~$5.0 million and ~~$5.5~~$5.5 million for the three and nine months ended September 30, 2021, respectively, and $7.7 million and $7.7 million for the three and nine months ended September 30, 2020, respectively. The Company’s provision for credit losses for the three and nine months ended September 30, 2021 and 2020 was related solely to changes in estimates regarding the collectability of the accounts receivable due from Abeona.No provision for credit losses was recorded for the three and nine months ended September 30, 2022.

Zolgensma License with Novartis Gene Therapies ~~Inc.~~

In March 2014, the Company entered into an exclusive license agreement, as amended, (the ~~March 2014~~Novartis License) with Novartis Gene Therapies (formerly AveXis, Inc.). Under the ~~March 2014~~Novartis License, the Company granted Novartis Gene Therapies an exclusive, worldwide commercial license, with rights to sublicense, to the NAV Technology Platform, as well as other certain rights, for the treatment of spinal muscular atrophy (SMA) in humans by in vivo gene therapy. Novartis Gene Therapies launched commercial sales of Zolgensma, a licensed product under the ~~March 2014~~Novartis License, in the second quarter of 2019, upon which the Company began recognizing royalty revenue on net sales of the licensed product.

Pursuant to the March 2014 License, Novartis Gene Therapies was obligated to pay a sales-based milestone fee of $80.0 million to the Company upon the achievement of $1.0 billion in cumulative net sales of licensed products. Novartis Gene Therapies achieved cumulative net sales of Zolgensma of $1.0 billion in the third quarter of 2020, upon which the Company recognized revenue of $80.0 million related to the sales-based milestone fee. The $80.0 million milestone fee was recorded as accounts receivable as of September 30, 2020, and the Company received payment of the $80.0 million milestone fee from Novartis Gene Therapies in October 2020.

~~Table of Contents~~

The Company recognized the following amounts under the ~~March 2014~~Novartis License ~~with Novartis Gene Therapies~~ (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		Three Months Ended September 30,				Nine Months Ended September 30,
Royalties on net sales of Zolgensma	$	30,254	$	18,799	$	66,946	$	40,723
Achievement of sales-based milestone for Zolgensma		—		80,000		—		80,000
									2022		2021		2022		2021
Zolgensma royalties									$	25,205	$	30,254	$	75,130	$	66,946
Other license revenue		—		—		—		3,500		—		—		31		—
Total license and royalty revenue	$	30,254	$	98,799	$	66,946	$	124,223	$	25,205	$	30,254	$	75,161	$	66,946

Interest income from licensing	$	5	$	6	$	17	$	20	$	8	$	5	$	84	$	17

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As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had recorded total accounts receivable of ~~$28.4~~$26.9 million and ~~$19.6~~$26.6 million, respectively, from Novartis Gene Therapies under the ~~March 2014~~Novartis License, which consisted primarily of ~~unbilled receivables for~~ Zolgensma ~~royalties.~~royalties receivable. The Zolgensma royalties receivable recorded as of September 30, ~~2021~~2022 included ~~$13.8~~$13.4 million expected to be paid to HCR in accordance with the Royalty Purchase Agreement discussed in Note 6. The Company recognizes royalty revenue from net sales of Zolgensma in the period in which the underlying products are sold by Novartis Gene Therapies, which in certain cases may require the Company to estimate royalty revenue for periods of net sales which have not yet been reported to the Company. Estimated royalties are reconciled to actual amounts reported in subsequent periods and royalty revenues are adjusted, as necessary.

Settlement Agreement with Abeona Therapeutics ~~Inc.~~

In November 2018, the Company entered into a license agreement with Abeona (as amended, the November 2018 License), for the treatment of various diseases using the NAV Technology Platform. Pursuant to the November 2018 License, Abeona was required to pay a license fee of ~~$8.0~~$8.0 million to the Company no later than April 1, 2020. Abeona failed to make this payment, and in April 2020, the Company delivered to Abeona a notice of its breach of the ~~license agreement~~November 2018 License and written demand for payment. Upon expiration of the applicable cure period in May 2020, the ~~license agreement~~November 2018 License terminated. As a result of the termination, Abeona was required to pay an additional ~~$20.0~~$20.0 million license fee to the Company within 15 days of the termination date, which otherwise would have been due to the Company in November 2020. ~~As of September 30, 2021, the Company had not received any portion of the $28.0 million in license fees due from Abeona under the license agreement.~~ Unpaid balances due under the November 2018 License accrue interest at ~~1.5%~~1.5% per month.

In May 2020, after the termination of the November 2018 License, Abeona filed a claim in arbitration alleging that the Company had breached certain responsibilities to communicate with Abeona regarding the Company’s prosecution of licensed patents under the November 2018 License. The Company disputed Abeona’s claim and filed a counterclaim in arbitration demanding payment of the ~~$28.0~~$28.0 million of unpaid fees from Abeona, plus accrued interest. A binding arbitration was held in March ~~2021. In July~~ 2021, and the arbitration tribunal issued its ruling in July 2021, which denied Abeona’s claim and upheld the Company’s counterclaim. The arbitration tribunal’s ruling, which was subsequently amended to reflect a minor adjustment in the computation of accrued interest, awarded the Company a total of ~~$33.6 million, which consisted of $28.0~~$33.6 million in damages and ~~$5.6 million in~~ accrued interest payable by Abeona.

Subsequent to the ~~Company by Abeona. As of October 28,~~arbitration tribunal’s ruling in July 2021, ~~the Company had not received any portion of the $33.6 million arbitration award from Abeona.~~

The Company has filed a petition to confirm the arbitration award and to enter judgment on it in the Supreme Court of the State of New York for New York County. The Company cannot be certain of the precise timing or amount of recovery and will continue to pursue enforcement of the award against Abeona. Abeona ~~has~~ filed an additional claim in a second arbitration to enforce a purported settlement relating to the unpaid fees, which the Company ~~disputes.~~disputed. In November 2021, the Company and Abeona entered into a settlement agreement and mutual release (the Settlement Agreement) to resolve all arbitration and legal proceedings and mutually release each party from any and all claims under the November 2018 License. Pursuant to the Settlement Agreement, Abeona will pay the Company a total of $30.0 million as follows: (i) $20.0 million which was paid in November 2021, (ii) $5.0 million payable in November 2022, which is fully secured by an irrevocable standby letter of credit issued to the Company by a reputable U.S. financial institution, and (iii) $5.0 million payable on the earlier of the third anniversary of the Settlement Agreement in November 2024 or the closing of a specified type of transaction by Abeona.

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had recorded gross accounts receivable of ~~$30.1~~$9.0 million and $8.8 million, respectively, from Abeona under the ~~November 2018 License, which~~Settlement Agreement. The gross accounts receivable of $9.0 million as of September 30, 2022 consisted of current accounts receivable of $5.0 million for the ~~$8.0~~payment due in November 2022, and non-current accounts receivable of $4.0 million ~~fee due April 1, 2020,~~for the ~~$20.0 million fee due within 15 days~~present value of the ~~termination of the license agreement in May 2020 and accrued interest on the outstanding balances.~~$5.0 million payment due by November 2024. While the Company anticipates taking appropriate measures to enforce the ~~aforementioned arbitration award if~~full collection of all amounts due from Abeona ~~does not comply with~~under the ~~tribunal’s ruling,~~Settlement Agreement, the Company assessed the collectability of the ~~$30.1 million due~~accounts receivable from Abeona as it relates to credit risk. In performing this assessment, the Company evaluated Abeona’s credit profile and financial condition, as well its expectations regarding Abeona’s future cash flows and ability to satisfy ~~this obligation.~~the contractual obligations of the Settlement Agreement. As a result of its ~~analyses,~~analysis, the Company recorded an allowance for credit losses of ~~$13.2~~$4.0 million and ~~$7.7~~$3.8 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, related to the non-current accounts receivable due from Abeona. The Company recorded a provision for credit losses of ~~$5.0~~$5.0 million and ~~$5.5~~$5.5 million for the three and nine months ended September 30, 2021, respectively, as a result of changes in estimates regarding the allowance during the periods.No provision for credit losses was recorded for the three and nine months ended September 30, 2022. The present value discount of the non-current accounts receivable from Abeona is accreted as interest income from licensing through the contractual due date using the effective interest method. The Company has elected to record increases in the allowance for credit losses associated with the accretion of the present value discount of the receivable as a reduction of the associated interest income, resulting in no interest income recognized during the periods related to the accretion of the present value discount on the non-current receivable from Abeona.

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As of September 30, 2021 and December 31, 2020, the Company had recognized interest income from licensing of $2.1 million related to the unpaid license fees from Abeona under the November 2018 License, which is included in the gross accounts receivable balance of $30.1 million. In accordance with its interest accrual policy, the Company ceased the recognition of interest income accrued under the license agreement subsequent to the establishment of the allowance for credit losses in the third quarter of 2020. The arbitration tribunal’s ruling in July 2021, as subsequently adjusted, awarded the Company $5.6 million in accrued interest payable by Abeona, including $3.5 million of interest earned subsequent to the receivable being placed on non-accrual status which has not been recognized in the consolidated financial statements. As of September 30, 2021, the Company had continued to maintain the accounts receivable due from Abeona on non-accrual status and will not recognize any further interest income associated with the accounts receivable unless and until such amounts are deemed to be collectable.Collaboration Agreements

AbbVie Collaboration and License Agreement ~~with AbbVie~~

In September 2021, the Company entered into a ~~Collaboration~~collaboration and ~~License Agreement~~license agreement with AbbVie Global Enterprises Ltd. (AbbVie), a subsidiary of AbbVie Inc., to jointly develop and commercialize RGX-314, the Company’s product candidate for the treatment of wet age-related macular degeneration (wet AMD), diabetic retinopathy (DR) and other chronic retinal diseases (the AbbVie Collaboration ~~and License~~ Agreement). The transaction is contingent upon the satisfaction of customary closing conditions, including the expiration or termination of the applicable waiting or suspension period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, and any other applicable competition laws.AbbVie Collaboration Agreement became effective in November 2021.

Pursuant to the AbbVie Collaboration ~~and License~~ Agreement, the ~~parties will conduct certain activities for~~Company granted AbbVie a co-exclusive license to develop and commercialize RGX-314 in the ~~development of products containing~~United States and an exclusive license to develop and commercialize RGX-314 ~~under a development plan determined in accordance with~~outside the ~~AbbVie Collaboration and License Agreement.~~United States. The Company and AbbVie will collaborate to develop ~~licensed products~~RGX-314 in the United States, and AbbVie will be responsible for the development of ~~licensed products~~RGX-314 in specified markets outside the United States. Through December 31, 2022, the Company will be responsible for development expenses for certain ongoing trials of RGX-314 and the parties will share additional development expenses related to RGX-314. Beginning on January 1, 2023, AbbVie will be responsible for the majority of all RGX-314 development expenses.

The Company will lead the manufacturing of RGX-314 for clinical development and U.S. commercial supply, and AbbVie will lead the manufacturing of RGX-314 for commercial supply outside the United States. Manufacturing expenses will be allocated between the parties in accordance with the terms of the AbbVie Collaboration ~~and License~~ Agreement and ~~mutually agreed~~ supply ~~agreements. In the United States, the Company shall participate in commercialization of licensed products under a commercialization plan to be~~agreements determined in accordance with the agreement. If requested by AbbVie, ~~Collaboration and License Agreement,~~the Company will manufacture up to a specified portion of RGX-314 for commercial supply outside the United States at a price specified in the agreement. AbbVie will lead the commercialization of RGX-314 globally, and the ~~parties~~Company will participate in U.S. commercialization efforts as provided under a commercialization plan determined in accordance with the agreement. The Company and AbbVie will share equally ~~share~~in the net profits and net losses associated with the commercialization of ~~licensed products~~RGX-314 in the United States. Outside the United States, AbbVie will be responsible, at its sole cost, for the commercialization of ~~licensed products.~~RGX-314.

~~The Company will receive an upfront payment of $370.0 million from AbbVie in connection with~~In consideration for the ~~closing of~~rights granted under the AbbVie Collaboration ~~and License Agreement. Additionally,~~Agreement, AbbVie paid the Company ~~will be eligible~~an up-front fee of $370.0 million upon the effective date of the agreement in November 2021 and is required to ~~receive~~pay to the Company up to ~~$1.38~~$1.38 billion ~~in development, regulatory and commercial milestone payments, in the aggregate, for~~upon the achievement of specified development and sales-based milestones, ~~for the licensed products,~~ of which ~~$782.5~~$562.5 million are based on development milestones and ~~regulatory milestones, with~~$820.0 million are sales-based milestones. AbbVie is also required to pay to the ~~remainder based on commercial milestones. The~~ Company ~~will also be eligible to receive~~ tiered royalties on net sales ~~by AbbVie~~ of ~~licensed products~~RGX-314 outside the United States at percentages in the mid-teens to low twenties, subject to specified offsets and reductions. ~~Royalties will~~

The Company applied the requirements of Topic 606 to the AbbVie Collaboration Agreement for the units of account in which AbbVie was deemed to be ~~payable~~a customer. The Company determined that there is only one material performance obligation under the agreement for the delivery of the intellectual property license to develop and commercialize RGX-314 globally. The intellectual property licensed to AbbVie includes the rights to certain patents, data, know-how and other rights developed and owned by the Company, as well as other intellectual property rights exclusively licensed by the Company from various third parties. As of September 30, 2022 and December 31, 2021, the transaction price of the AbbVie Collaboration Agreement was $370.0 million, which consisted solely of the up-front payment received in November 2021. The $370.0 million transaction price was fully recognized as revenue upon the delivery of the license to AbbVie in November 2021. Variable consideration under the AbbVie Collaboration Agreement, which has been excluded from the transaction price, includes $562.5 million in payments for development milestones that have not yet been achieved and were not considered probable of achievement. Additionally, the transaction price excludes sales-based milestone payments of $820.0 million and royalties on ~~a product-by-product and country-by-country basis~~net sales of RGX-314 outside the United ~~States commencing~~States. Development milestones will be added to the transaction price and recognized as revenue upon achievement, or if deemed probable of achievement. In accordance with the sale- or usage-based royalty exception under Topic 606, royalties on ~~the date of first commercial sale of each licensed product,~~net sales and ~~ending on the later of (a) expiration of all valid claims of specified licensed patents in such country, (b) expiration of regulatory exclusivity in such country and (c)(x) if such country is~~sales-based milestones will be recognized as revenue in the ~~European Union, 12 years following first commercial sale of such product in such country,~~period the underlying sales occur or ~~(y) if such country is outside the European Union, 10 years following the first commercial sale of such product in such country (the Royalty Term).~~

~~The AbbVie Collaboration and License Agreement will remain in effect, unless earlier terminated, on a country-by-country basis until (a)~~milestones are achieved. There were no changes in the ~~case~~transaction price of ~~the United States, the later of (i)~~ ~~the 120th day after any quarter in which~~ no licensed product is being developed or commercialized under such agreement, and (ii) the date that specified licensed patents for a licensed product expire in the United States, and (b) in the case of any country outside the United States, the date the Royalty Term for a licensed product expires in such country. The AbbVie Collaboration and License Agreement contains provisions for termination, including termination for convenience by AbbVie.

~~Contemporaneously with entering into~~ the AbbVie Collaboration Agreement, and ~~License Agreement, in~~no revenue was recognized, during the three and nine months ended September 2021, the Company entered into a Sublicense Agreement with AbbVie (the AbbVie Sublicense Agreement) pursuant to which the Company granted AbbVie an exclusive sublicense to exploit licensed products in connection with the AbbVie Collaboration and License Agreement30, 2022.

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~~under specified patents licensed~~The Company applied the requirements of Topic 808 to the AbbVie Collaboration Agreement for the units of account which were deemed to be a collaborative arrangement. Both the Company and AbbVie will perform various activities related to the development, manufacturing and commercialization of RGX-314 in the United States. Development costs are shared between the parties in accordance with the terms of the AbbVie Collaboration Agreement, and the parties will share equally in the net profits and losses derived from sales of RGX-314 in the United States. The Company accounts for payments to and from AbbVie for the sharing of development and commercialization costs in accordance with its accounting policy for collaborative arrangements. Amounts owed to AbbVie for the Company’s share of development costs or commercialization costs incurred by AbbVie are recorded as research and development expense or general and administrative expense, respectively, in the period the costs are incurred. Amounts owed to the Company for AbbVie’s share of development costs or commercialization costs incurred by the Company are recorded as a reduction of research and development expense or general and administrative expense, respectively, in the period the costs are incurred. At the end of each reporting period, the Company records a net amount due to or from ~~The Trustees~~AbbVie as a result of the ~~University~~cost-sharing arrangement. As of ~~Pennsylvania.~~ September 30, 2022 and December 31, 2021, the Company had recorded $3.4 million and $5.9 million, respectively, due from AbbVie for net reimbursement of costs incurred for activities performed under AbbVie Collaboration Agreement, which is included in other current assets on the consolidated balance sheets.

The ~~AbbVie Sublicense Agreement will be coterminous with~~Company recognized the following amounts under the AbbVie Collaboration Agreement for the three and ~~License Agreement.~~nine months ended September 30, 2022 (in thousands):


	Three Months Ended			Nine Months Ended
	September 30, 2022			September 30, 2022
Net cost reimbursement to (from) AbbVie included in:
Research and development expense	$	(4,245	)	$	(12,339	)
General and administrative expense		750			954
Total net cost reimbursement to (from) AbbVie	$	(3,495	)	$	(11,385	)

9. Stock-based Compensation

In January ~~2021,~~2022, the Board of Directors authorized an additional ~~1,499,037~~1,713,246 shares to be issued under the 2015 Equity Incentive Plan (the 2015 Plan). As of September 30, ~~2021,~~2022, the total number of shares of common stock authorized for issuance under the 2015 Plan and the 2014 Stock Plan (the 2014 Plan) was ~~13,911,954,~~15,625,200, of which ~~2,392,917~~2,691,957 remained available for future grants under the 2015 Plan.

Stock-based Compensation Expense

The Company’s stock-based compensation expense by award type was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Stock options	$	8,920	$	7,880	$	27,010	$	23,745	$	8,663	$	8,920	$	26,755	$	27,010
Restricted stock units		698		—		2,093		—		1,458		698		3,970		2,093
Employee stock purchase plan		116		155		543		623		124		116		655		543
	$	9,734	$	8,035	$	29,646	$	24,368	$	10,245	$	9,734	$	31,380	$	29,646

As of September 30, ~~2021,~~2022, the Company had ~~$75.7~~$72.9 million of unrecognized stock-based compensation expense related to stock options, restricted stock units and the 2015 Employee Stock Purchase Plan (the 2015 ESPP), which is expected to be recognized over a weighted-average period of ~~2.5~~2.4 years.

The Company recorded aggregate stock-based compensation expense in the consolidated statements of operations and comprehensive ~~income (loss)~~loss as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Research and development	$	4,868	$	4,110	$	14,999	$	12,442	$	5,351	$	4,868	$	16,426	$	14,999
General and administrative		4,866		3,925		14,647		11,926		4,894		4,866		14,954		14,647
	$	9,734	$	8,035	$	29,646	$	24,368	$	10,245	$	9,734	$	31,380	$	29,646

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Stock Options

The following table summarizes stock option activity under the 2014 Plan and 2015 Plan (in thousands, except per share data):

Weighted-

average

Weighted-

Remaining

average

Contractual

Aggregate

Exercise

Life

Intrinsic

Shares

Price

(Years)

Value (a)

Outstanding at December 31, 2020

6,361

$
31.21

7.2

$
101,356

Granted

1,373

$
43.47

Exercised

(325
)

$
11.21

Cancelled or forfeited

(232
)

$
45.79

Outstanding at September 30, 2021

7,177

$
33.99

7.0

$
74,141

Exercisable at September 30, 2021

4,408

$
28.74

6.0

$
67,896

Vested and expected to vest at September 30, 2021

7,177

$
33.99

7.0

$
74,141


						Weighted-
						average
				Weighted-		Remaining
				average		Contractual		Aggregate
				Exercise		Life		Intrinsic
	Shares			Price		(Years)		Value (a)
Outstanding at December 31, 2021		7,126		$	34.16		6.8	$	41,128
Granted		1,466		$	32.46
Exercised		(329	)	$	8.41
Cancelled or forfeited		(489	)	$	39.77
Outstanding at September 30, 2022		7,774		$	34.58		6.7	$	22,167
Exercisable at September 30, 2022		5,082		$	33.27		5.7	$	21,668
Vested and expected to vest at September 30, 2022		7,774		$	34.58		6.7	$	22,167

(a) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money at the dates reported.

~~(a)~~

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money at the dates reported.

~~Table of Contents~~

The weighted-average grant date fair value per share of options granted during the nine months ended September 30, ~~2021~~2022 was ~~$26.28.~~$19.50. During the nine months ended September 30, ~~2021,~~2022, the total number of stock options exercised was ~~325,273,~~328,529, resulting in total proceeds of ~~$3.3~~$2.8 million. The total intrinsic value of options exercised during the nine months ended September 30, ~~2021~~2022 was ~~$10.1~~$6.8 million.

Restricted Stock Units

The following table summarizes restricted stock unit activity under the 2015 Plan (in thousands, except per share data):

				Weighted-
				average					Weighted-average
				Grant Date					Grant Date
	Shares			Fair Value		Shares			Fair Value
Unvested balance at December 31, 2020		—		$	—
Unvested balance at December 31, 2021							277		$	43.62
Granted		277		$	44.17		438		$	31.81
Vested		—		$	—		(66	)	$	44.19
Forfeited		(12	)	$	44.68		(32	)	$	37.79
Unvested balance at September 30, 2021		265		$	44.15
Unvested balance at September 30, 2022							617		$	35.48

NoThe total intrinsic value of restricted stock units vested during the ~~three and~~ nine months ended September 30, ~~2021 and 2020.~~2022 was $2.1 million. No restricted stock units vested during the nine months ended September 30, 2021.

Employee Stock Purchase Plan

In January ~~2021,~~2022, the Board of Directors authorized an additional ~~374,759~~428,311 shares to be issued under the 2015 ESPP. As of September 30, ~~2021,~~2022, the total number of shares of common stock authorized for issuance under the 2015 ESPP was ~~998,683,~~1,426,994, of which ~~769,174~~1,121,752 remained available for future issuance. During the nine months ended September 30, ~~2021, 53,596~~2022, 75,733 shares of common stock were issued under the 2015 ESPP.

10. Income Taxes

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax ~~assets.~~assets as of September 30, 2022 and December 31, 2021. Based on the Company’s history of operating losses, ~~including three-year cumulative loss positions as of September 30, 2021~~ and ~~December 31, 2020,~~other relevant facts and circumstances, the Company concluded that it iswas more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company provided a full valuation allowance for its net deferred tax assets as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

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~~11.~~11. Related Party Transactions

FOXKISER LLP

Since 2016, the Company ~~has been~~was party to professional services agreements with FOXKISER LLP (FOXKISER), an affiliate of certain stockholders of the Company and an affiliate of a member of the Company’s Board of Directors, pursuant to which the Company ~~pays~~paid a fixed monthly fee in consideration for certain strategic services provided by FOXKISER. Effective January 2019, the Company entered into a new professional services agreement with FOXKISER with similar terms and conditions as the previous agreements. The agreement was amended effective June 2019 to expand the scope of the services provided and increase the monthly fee. Effective August 2020, the agreement was further amended to extend the term of the agreement. In December 2021, the Company provided notice of termination of the agreement ~~by two years through December~~to FOXKISER, and the agreement was terminated effective June 2022. ~~The agreement may be terminated by either party with six months’ advanced written notice.~~ Expenses incurred under the agreement with FOXKISER were ~~$1.2 million~~zero and ~~$3.6~~$2.4 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, and ~~$1.2~~$1.2 million and ~~$3.6~~$3.6 million for the three and nine months ended September 30, ~~2020,~~2021, respectively, and were recorded as research and development expenses in the consolidated statements of operations and comprehensive ~~income (loss).~~loss.

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12. Net ~~Income (Loss)~~Loss Per Share

~~The computations of basic and diluted net income (loss) per share were as follows (in thousands, except per share data):~~

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Basic net income (loss) per share:

Net income (loss)

$
(58,405
)

$
8,791

$
(166,183
)

$
(65,009
)
Shares used in computation:

Weighted-average common shares outstanding

42,629

37,342

42,324

37,234

Basic net income (loss) per share

$
(1.37
)

$
0.24

$
(3.93
)

$
(1.75
)
Diluted net income (loss) per share:

Net income (loss)

$
(58,405
)

$
8,791

$
(166,183
)

$
(65,009
)
Shares used in computation:

Weighted-average common shares outstanding

42,629

37,342

42,324

37,234

Stock options

—

1,529

—

—

Employee stock purchase plan

—

6

—

—

Weighted-average diluted common shares

42,629

38,877

42,324

37,234

Diluted net income (loss) per share

$
(1.37
)

$
0.23

$
(3.93
)

$
(1.75
)

~~For periods in which~~Since the Company incurred net losses for the three and nine months ended September 30, 2022 and 2021, common stock equivalents were excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. Accordingly, basic and diluted net loss per share were the same for such periods. The following potentially dilutive common stock equivalents outstanding at the end of the period were excluded from the computations of weighted-average diluted common shares for the periods indicated as their effects would be anti-dilutive (in thousands):


	Three and Nine Months Ended September 30,
	2022		2021
Stock options issued and outstanding		7,774		7,177
Unvested restricted stock units outstanding		617		265
Employee stock purchase plan		26		15
		8,417		7,457

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Stock options issued and outstanding

7,177

4,072

7,177

6,409

Unvested restricted stock units outstanding

265

—

265

—

Employee stock purchase plan

15

—

15

21

7,457

4,072

7,457

6,430

13. Supplemental Disclosures

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Accrued sublicense fees and royalties	$	15,869	$	12,160	$	15,715	$	23,483
Accrued personnel costs		14,034		13,155		13,427		19,849
Accrued purchases of property and equipment		8,303		7,853
Accrued external research and development expenses		8,069		9,738		9,955		11,783
Accrued external general and administrative expenses		2,974		2,865		3,064		3,642
Accrued purchases of property and equipment						1,349		5,285
Accrued income taxes payable		—		3,135		—		11,325
Other accrued expenses and current liabilities		445		176		952		744
	$	49,694	$	49,082	$	44,462	$	76,111

Supplemental Disclosures of Non-cash Investing and Financing Activities

Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities were $3.1 million as of September 30, 2022, a net decrease of $7.0 million from December 31, 2021, and $12.8 million as of September 30, 2021, a net increase of $3.3 million from December 31, 2020.

21Proceeds due to the Company for sales of non-marketable equity securities included in other current assets as of September 30, 2021 were $0.6 million. No such amounts were recorded as of September 30, 2022.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, which we filed with the SEC on March 1, ~~2021.~~2022. In addition, you should read the “Risk Factors” and “Information Regarding Forward-Looking Statements” sections of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a leading clinical-stage biotechnology company seeking to improve lives through the curative potential of gene therapy. Our investigational gene ~~therapy product candidates~~therapies are designed to deliver functional genes ~~to cells~~ to address genetic defects ~~or to enable~~in cells, inenabling the ~~body to produce~~production of therapeutic proteins or antibodies that are intended to impact disease. Through a single administration, ~~our~~ gene therapy ~~product candidates are designed to provide long-lasting effects,~~could potentially ~~significantly altering~~alter the course of disease significantly and ~~delivering~~deliver improved patient ~~outcomes.~~outcomes with long-lasting effects.

Overview of Product Candidates

We have developed a broad pipeline of gene therapy programs using our proprietary adeno-associated virus (AAV) gene therapy delivery platform (NAV Technology Platform) to address genetic ~~diseases through~~diseases. Our programs and product candidates are described below:

•

RGX-314: We are developing RGX-314 in collaboration with AbbVie as a potential one-time treatment for wet age-related macular degeneration (wet AMD), diabetic retinopathy (DR) and otheradditional chronic retinal conditions which cause total or partial vision loss. We are evaluating two ~~modalities: AAV-mediated antibody~~separate routes of administration of RGX-314 to the eye: a subretinal delivery ~~and monogenic~~procedure as well as a targeted, in-office administration to the suprachoroidal space. We have licensed certain exclusive rights to the SCS Microinjector® from Clearside Biomedical, Inc. (Clearside) to deliver gene ~~replacement. The AAV-mediated antibody delivery modality is designed~~therapy treatments to ~~treat serious and chronic diseases by delivering~~ the ~~genes necessary for the sustained production of therapeutic antibodies~~ ~~in vivo. Our monogenic gene replacement approach builds upon the well-understood mechanism of replacing a dysfunctional or missing gene with a functional copy~~suprachoroidal space of the ~~gene~~eye.

Enrollment is ongoing in ~~order to enable sustained production of necessary proteins.~~

~~Gene therapy using NAV Vectors for AAV-mediated antibody delivery~~

•

~~RGX-314:~~ ~~We are developing RGX-314 as a~~ novel, single-administration gene therapy for the treatment of wet age-related macular degeneration (wet AMD), diabetic retinopathy (DR), and other additional chronic retinal conditions which cause total or partial vision loss. In September 2021, we announced a strategic partnership with AbbVie to develop and commercialize RGX-314 for the treatment of wet age-related macular degeneration (wet AMD), diabetic retinopathy (DR) and other chronic retinal diseases. The transaction is expected to close by the end of 2021, subject to the satisfaction of customary closing conditions, including applicable regulatory approvals. ~~We are advancing~~ two separate routes of administration of RGX-314 to the eye, through a standardized subretinal delivery procedure and by delivery to the suprachoroidal space using the SCS Microinjector™ licensed from Clearside Biomedical, Inc.

~~We have initiated a~~ pivotal ~~program~~trials, ATMOSPHERE® and ASCENT™, to evaluate the efficacy and safety of RGX-314 in patients with wet AMD using the subretinal delivery ~~approach. We plan~~approach, and we expect these pivotal trials to ~~conduct two~~support a Biologics License Application (BLA) submission in 2024. ATMOSPHERE and ASCENT are multi-center, randomized, ~~well-controlled clinical~~active-controlled trials to evaluate the efficacy and safety of a single-administration of RGX-314 versus standard of care in patients with wet AMD. In October 2022, we announced data from the Phase I/IIa Long-term Follow-up study of RGX-314 for the treatment of wet AMD ~~in which we expect to enroll approximately 700 patients total. The first pivotal trial (ATMOSPHERE~~^TM) is enrolling patients and we are planning to initiate the second pivotal trial in the fourth quarter of 2021. Based on the outcome of these trials, the pivotal program is expected to support a Biologics License Application (BLA) filing in 2024.

using subretinal delivery. As of August ~~9, 2021,~~29, 2022, RGX-314 continued to be generally well-tolerated ~~across all dose cohorts~~in the long-term follow-up study (n=37). Patients treated with RGX-314 continued to demonstrate a long-term, durable treatment effect in Cohort 3 up to four years and in Cohort 4 up to three years. Stable to improved visual acuity was observed, with a mean best corrected visual acuity (BCVA) of +12 letters from baseline at four years for Cohort 3 patients and -5 letters from baseline at three years for Cohort 4 patients following RGX-314 administration.

We are also evaluating the ~~ongoing~~efficacy, safety and tolerability of suprachoroidal delivery of RGX-314 through AAVIATE®, a multi-center, open label, randomized, controlled, dose-escalation Phase I/II trial of RGX-314 for the treatment of wet AMD and its Long-Term-Follow-Up study. Durable treatment effect was observed in patients in Cohorts 4 and 5 at 2 years after administration of RGX-314, including stable visual acuity, decreased retinal thickness, and reductions in anti-VEGF injection burden. Long-term, durable treatment effect was demonstrated in Cohort 3 over three years, including mean improvement in vision and stable retinal thickness, and reductions in anti-VEGF treatment burden.

~~We are also conducting a Phase II trial of the suprachoroidal delivery of RGX-314 using the SCS Microinjector for the treatment of wet AMD known as AAVIATE®.~~AMD. In October ~~2021,~~2022, we ~~presented~~announced additional positive ~~initial~~interim data from ~~patients enrolled in the ongoing Phase II AAVIATE trial.~~AAVIATE. As of ~~September 13, 2021,~~August 1, 2022, RGX-314 suprachoroidal delivery was reported to be ~~well-tolerated~~well tolerated across 5085 patients dosed in Cohorts ~~1 through 3. At six months following one-time administration of~~1-5. Mild intraocular inflammation was reported at similar incidence in the first and second dose levels, with an increase in incidence in mild to moderate inflammation seen at the third dose level (Cohort 4). All intraocular inflammation resolved with topical corticosteroids. Patients treated in the RGX-314 arms and the ranibizumab control arm both continued to demonstrate stable ~~visual acuity~~BCVA and central retinal thickness ~~as well as~~(CRT) at 6 months. In addition, a meaningful reduction in ~~anti-VEGF~~anti-vascular endothelial growth factor (anti-VEGF) treatment burden following administration of RGX-314 was observed and ranged from -64% to -85% across all cohorts. The highest reduction in treatment burden was observed in the third dose level, with patients ~~from Cohort 1 (dose level: 2.5x10~~¹¹ ~~genomic copies per eye (GC/eye)). Among patients~~receiving a mean of 1.3 injections over six months following administration of RGX-314, which represents an 85% reduction in ~~Cohort 1, common~~anti-VEGF treatment ~~emergent adverse events (TEAE) in the study eye were generally mild, and none were severe. Mild intraocular inflammation was observed in four~~burden. Ten out of 15 patients ~~based on slit-lamp examination,~~(67%) in the third dose level received no anti-VEGF injections over six months following RGX-314 administration. Interim data from the second dose level (Cohorts 2 and ~~all cases were resolved within days~~3) suggested there was no meaningful difference in safety and vision outcomes for patients who are neutralizing antibody (NAb) positive. We have expanded the AAVIATE trial to ~~weeks on topical corticosteroids.~~include a new cohort at the third dose level with short-course prophylactic ocular steroids following RGX-314 administration to evaluate the ability to prevent or reduce the occurrence of the mild to moderate intraocular inflammation seen in previous cohorts. Patients will be enrolled in Cohort 6 regardless of NAb status.

2223

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We ~~plan to report interim results at six months of follow-up for patients in Cohort 2~~ ~~at the American Academy of Ophthalmology 2021 Annual Meeting in New Orleans, LA, November 12-15, 2021. We have~~are also ~~completed dosing of patients in Cohort 3 which is~~ evaluating the efficacy, safety and tolerability of RGX-314 ~~in up to 20 patients who are neutralizing antibody (NAb) positive with the same dose evaluated in Cohort 2, 5.0x10~~¹¹ ~~GC/eye of RGX-314.~~

~~In October 2021, we announced that the AAVIATE trial expanded to include two additional cohorts (Cohorts 4 and 5) to evaluate RGX-314 at a dose level of 1.0x10~~¹² GC/eye. Cohort 4 will enroll 15 patients who will be dosed with RGX-314 and Cohort 5 will evaluate the same dose level evaluated in Cohort 4 in 20 patients who are neutralizing antibody (NAb) positive. As in previous cohorts, patients will not receive prophylactic immune suppressive corticosteroid therapy before or after administration of RGX-314.

~~In addition, we are enrolling patients in ALTITUDE~~^TM,~~a Phase II trial of the suprachoroidal delivery of RGX-314~~ for the treatment of ~~DR.~~DR through ALTITUDE®, a multi-center, open label, randomized, controlled, dose-escalation Phase II trial. In ~~October 2021,~~November 2022, we ~~presented~~announced additional positive ~~initial~~interim data from ~~patients in Cohort 1 of the ongoing Phase II ALTITUDE trial.~~ALTITUDE. As of ~~September 29, 2021,~~October 17, 2022, RGX-314 was reported to be well tolerated ~~with no drug-related serious adverse events~~across 50 patients dosed in ~~the 15~~Cohorts 1-3 at two dose levels (D1 and D2). Three patients ~~dosed~~had intraocular inflammation, all of which were mild and resolved on topical corticosteroids. No meaningful differences in safety outcomes were observed at six months for patients who are NAb positive. BCVA remained stable in Cohorts 1-3 through six months. Patients treated with RGX-314 in ~~Cohort 1 (dose level: 2.5x10~~¹¹ ~~GC/ eye). No intraocular inflammation was observed on slit-lamp examination. Three~~Cohorts 1-3 demonstrated clinically meaningful improvements in disease severity and less disease worsening versus observation control at six months ~~following one-time administration of RGX-314, five patients (33%) demonstrated a two-step or greater improvement from baseline on~~as measured by the Early Treatment Diabetic Retinopathy Study-Diabetic Retinopathy Severity Scale ~~(ETDRS-DRSS)~~(DRSS). Specifically, 20% (D1: 40%, ~~including one patient who had~~D2: 11%) achieved ≥2-step DRSS improvement vs. 10% in control, 54% (D1: 60%, D2: 51%) achieved any DRSS improvement vs. 20% in control, and 0% (D1: 0%, D2: 0%) worsened ≥2 steps vs. 20% in control. We have expanded the ALTITUDE trial to include a ~~four-step improvement. No~~higher third dose level (1x1012 GC/eye), with patients stratified by DRSS levels across cohorts and all receiving short-course prophylactic ocular steroids following RGX-314 administration.

•

RGX-202: We are developing RGX-202 for the treatment of Duchenne muscular dystrophy (Duchenne), a rare disease caused by mutations in the ~~observation control portion~~gene responsible for making dystrophin, a protein of central importance for muscle cell structure and function. Without dystrophin, muscles throughout the body degenerate and become weak, eventually leading to loss of movement and independence, required support for breathing, cardiomyopathy and premature death.

We have received clearance of our Investigational New Drug (IND) application by the U.S. Food and Drug Administration (the FDA) to evaluate RGX-202 in a first-in-human, Phase I/II clinical trial named AFFINITY DUCHENNETM. This will be a multicenter, open-label dose escalation and dose expansion clinical trial to evaluate the safety, tolerability and clinical efficacy of RGX-202 in patients with Duchenne. We anticipate dosing the first patient in this trial in the first half of 2023.

•

RGX-121: We are developing RGX-121 for the treatment of Mucopolysaccharidosis Type II (MPS II), a rare disease caused by a deficiency of the ~~study demonstrated a two-step or greater improvement from baseline on~~IDS gene which encodes I2S, an enzyme that is responsible for the ~~ETDRS-DRSS.~~

~~Enrollment~~breakdown of ~~patients in Cohorts 2 and 3~~structures that dispose of waste products inside cells.

Enrollment is ongoing in ~~ALTITUDE. Both cohorts will evaluate RGX-314 at a dose level~~the pivotal program of ~~5.0x10~~¹¹ GC/eye. Cohort 2 will include 20 patients randomized to receive RGX-314 versus observational control at a 3:1 ratio. Cohort 3 will evaluate RGX-314 at the same dose level as Cohort 2 in 20 patients who are NAb positive. As in Cohort 1, patients in Cohorts 2 and 3 will not receive prophylactic immune suppressive corticosteroid therapy before or after administration of RGX-314.

CAMPSIITETM•

~~AAV-Mediated Antibody Expression for the Treatment of Hereditary Angioedema (HAE):~~ We are developing a novel, one-time treatment utilizing a NAV Vector to deliver a gene encoding for a therapeutic antibody that targets and binds to plasma kallikrein, a key protein left unregulated in patients with HAE. HAE is a chronic and severe disease characterized by recurring severe swelling (angioedema), ~~most commonly in the face, airway, intestines and limbs. We continue to conduct research and preclinical studies to advance a gene therapy candidate for the treatment of HAE.~~

•

~~AAV-Mediated Antibody Expression for the Treatment of Neurodegenerative Diseases:~~ We have established a research program in partnership with Neurimmune AG (Neurimmune) to jointly develop and commercialize novel gene therapies using NAV Vectors to deliver human antibodies for chronic neurodegenerative diseases, with an initial focus on ~~diseases associated with the accumulation and deposition of the microtubule-associated protein tau (tauopathies) and alpha-synuclein (alpha-synucleinopathies).~~

~~Gene therapy programs for the potential treatment of rare monogenic diseases~~

•

~~RGX-202:~~ We are developing RGX-202 for the treatment of Duchenne Muscular Dystrophy (DMD), a severe, progressive, degenerative muscle disease caused by mutations in the gene which encodes dystrophin, a protein involved in muscle cell structure and function. Without functional dystrophin protein, muscles throughout the body degenerate and become weak. We expect to submit an Investigational New Drug (IND) application for this program by the end of 2021.

•

~~RGX-121:~~ We are developing RGX-121 for the treatment of the neurological symptoms of Mucopolysaccharidosis Type II (MPS II), a severe genetic lysosomal storage disease caused by deficiency of iduronate-2-sulfatase (I2S), an enzyme that is responsible for breakdown of cellular waste products.

~~We are conducting~~ a Phase I/IIII/III multi-center, open-label trial to evaluate the efficacy, safety, tolerability and pharmacodynamics of RGX-121 in patients with MPS II up to ~~the age of~~ 5 years old. The trial is expected to enroll up to 10 MPS II patients using commercial-scale cGMP material to support a BLA filing in 2024 using the accelerated approval pathway, with the potential to enroll additional patients. In August 2022, REGENXBIO announced positive interim data from the CAMPSIITE trial of RGX-121. As ~~reported in February 2021,~~of August 1, 2022, RGX-121 was reported to be well-tolerated across all cohorts in 14 patients dosed with RGX-121. Patients in all three cohorts demonstrated encouraging, dose-dependent reductions of cerebrospinal fluid (CSF) glycosaminoglycans (GAGs), key biomarkers of I2S enzyme activity, following one-time administration of RGX-121. Improvements in neurodevelopmental function and caregiver reported outcomes in Cohorts 1 and 2 ~~of the Phase I/II trial, and no drug-related SAEs were reported. Biomarker data from patients in both cohorts indicated encouraging signals of I2S enzyme~~demonstrated CNS activity up to 2 years after RGX-121 administration. GAGs in the central nervous system following one-time administration of RGX-121, with consistent reductions of heparan sulfate (HS) and D2S6, a component of HS. Patients in Cohorts 1 and 2 also demonstrated continued neurocognitive development and evidence of I2S enzyme activity in plasma and urine following administration of RGX-121. WeCSF have ~~expanded Cohort 3 of~~ the ~~ongoing Phase I/II trial to enroll up to 6 additional patients. Additional data from this trial is expected~~potential to be ~~reported~~considered a surrogate biomarker that is reasonably likely to predict clinical benefit in MPS II disease under the accelerated approval pathway, as buildup of GAGs in the ~~first half~~CSF of ~~2022. In addition, we continue to enroll~~MPS II patients ~~in a~~correlates with clinical manifestations, including neurodevelopmental deficits.

A second Phase I/II trial of RGX-121 is ongoing for the treatment of pediatric patients with MPS II ~~over~~ages 5-18 years old to evaluate the ~~age~~safety of ~~5 years old.~~a single administration of RGX-121, the effects of RGX-121 on biomarkers of I2S enzyme activity, and changes in cognitive function, adaptive behavior, daily function and quality of life.

•

RGX-111: We are developing RGX-111 for the treatment of Mucopolysaccharidosis Type I (MPS I), a rare disease caused by a deficiency of IDUA, an enzyme required for the breakdown of structures that dispose of waste products inside cells.

23We are conducting a Phase I/II clinical trial in patients with MPS I to evaluate the safety, tolerability and pharmacodynamics of RGX-111, as well as the effects of RGX-111 on biomarkers of IDUA activity, neurocognitive development and other outcome measures. We continue with plans to enroll additional patients in a Cohort 2 expansion arm of the Phase I/II trial.

•

RGX-181: We are developing RGX-181 for the treatment of late-infantile neuronal ceroid lipofuscinosis type 2 (CLN2) disease, a form of Batten disease, caused by mutations inthe tripeptidyl peptidase 1 (TPP1) gene.

•

RGX-381: We are developing RGX-381 for the treatment of the ocular manifestations of CLN2 disease.

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•

~~RGX-111:~~ We are developing RGX-111 for the treatment of the neurological symptoms of Mucopolysaccharidosis Type I (MPS I), a severe genetic lysosomal storage disease caused by deficiency of α-l-iduronidase (IDUA), an enzyme required for breakdown of cellular waste products. We have completed dosing of patients in the first cohort of a Phase I/II clinical trial for RGX-111 and enrollment is continuing in Cohort 2. We expect to share initial data from this trial in the first half of 2022.

•

~~RGX-181:~~ We are developing RGX-181 for the treatment of late-infantile neuronal ceroid lipofuscinosis type 2 (CLN2) disease, one of the most common forms of Batten disease, caused by mutations in the tripeptidyl peptidase 1 (TPP1) gene. An IND was submitted to the FDA, after which the FDA notified REGENXBIO that its proposed trial had been placed on clinical hold and the agency requested more information to support the initial dose selection and certain study drug administration procedures. We continue to evaluate the path forward for RGX-181 and plan to provide a program update in 2022.

•

~~RGX-381:~~ We are developing RGX-381 for the treatment of ocular manifestations of CLN2 disease. We are conducting additional preclinical studies of RGX-381 and are in discussions with regulatory agencies. We plan to provide a program update in 2022.

In addition to our product candidates described above, we have also funded, and plan to continue to fund, preclinical research on potential product candidate programs that may become part of our internal product development pipeline. We have partnered with a number of leading academic institutions and will continue to seek partnerships with innovative institutions to develop novel NAV gene therapy product candidates.

Overview of Our NAV Technology Platform

In addition to our internal product development efforts, we also selectively license the NAV Technology Platform to other leading biotechnology and pharmaceutical companies, which we refer to as NAV Technology Licensees. As of September 30, ~~2021,~~2022, our NAV Technology Platform was being applied in one FDA approved product ~~(Zolgensma®~~(Zolgensma®), and the preclinical and clinical development of 20a number of partnered programs. Licensing the NAV Technology Platform allows us to maintain our internal product development focus on our core disease indications and therapeutic areas while still expanding the NAV gene therapy pipeline, developing a greater breadth of treatments for patients, providing additional technological and potential clinical proof-of-concept for our NAV Technology Platform and creating potential additional revenue.

~~Collaboration and License Agreement with AbbVie~~

Pursuant to the AbbVie Collaboration and License Agreement, the parties will conduct certain activities for the development of products containing RGX-314 under a development plan determined in accordance with the AbbVie Collaboration and License Agreement. In the United States, the parties are required to use commercially reasonable efforts to develop one licensed product for the treatment of each of (a) wet AMD utilizing suprachoroidal delivery, (b) wet AMD utilizing subretinal delivery and (c) DR and, (d) following the achievement of specified milestone events, one licensed product for the treatment of an additional indication. In specified markets outside the United States, AbbVie is required to use commercially reasonable efforts to develop one licensed product for each such indication. Through December 31, 2022, we will be responsible for development expenses for certain ongoing trials of RGX-314 and the parties will share additional development expenses related to RGX-314. Beginning on January 1, 2023, AbbVie will be responsible for the majority of all RGX-314 development expenses.

~~We will lead the manufacturing of RGX-314 for clinical development and U.S. commercial supply, and AbbVie will lead manufacturing of RGX-314 for commercial supply outside the United States.~~ ~~The parties will equally share net profits and net losses associated with commercialization of licensed products in the United States. Outside the United States, AbbVie will be responsible, at its sole cost, for the commercialization of licensed products.~~

~~We will receive an upfront payment of $370.0 million from AbbVie in connection with the closing of the AbbVie Collaboration and License Agreement.~~ Additionally, we will be eligible to receive up to $1.38 billion in development, regulatory and commercial milestone payments, in the aggregate, for the achievement of specified milestones for the licensed products, of which $782.5 million are based on development and regulatory milestones, with the remainder based on commercial milestones~~. We will also be eligible to~~

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~~receive tiered royalties on net sales by AbbVie of licensed products outside the United States at percentages in the mid-teens to low twenties, subject to specified offsets and reductions.~~

Subject to the closing of the AbbVie Collaboration and License Agreement, we anticipate the agreement will have a material impact on our future revenues, research and development expenses, other operating expenses and operating cash flows associated with the development and commercialization of RGX-314. For additional information regarding the AbbVie Collaboration and License Agreement, please refer to Note 8, “License and Royalty Revenue—Collaboration and License Agreement with AbbVie” to the accompanying unaudited consolidated financial statements.

Impact of COVID-19

We are continuing to actively monitor the impact of the COVID-19 pandemic, including the emergence of variant strains and governmental reactions, on our business, results of operations and financial condition. Our offices, laboratories, clinical trial sites, prospective clinical trial sites, contract research organizations (CROs), contract manufacturing organizations (CMOs) and other collaborators and partners are located in jurisdictions where quarantines, executive orders, shelter-in-place orders, guidelines, and other similar orders and restrictions intended to control the spread of the disease have been put in place by governmental authorities. At certain times during the COVID-19 pandemic, we have implemented a work-from-home policy for all employees who are not essential to be onsite, and we may take additional actions that alter our operations, as may be required by federal, state or local authorities or which we determine are in the best interests of our employees.

The COVID-19 pandemic has caused delays to our clinical trials and may further delay or prevent us from proceeding with our clinical trials. Our other business initiatives, such as preclinical development and manufacturing operations, may also be affected by the COVID-19 pandemic. For example, the construction of our current good manufacturing practice production facility ~~has been~~was delayed from our original estimates ~~and may be delayed further,~~ due to various government orders and restrictions relating to the COVID-19 ~~pandemic~~.pandemic. In addition, if the business and operations of our licensees are adversely affected by the COVID-19 pandemic, our revenues could in turn be adversely affected. We are proactively taking measures to mitigate or reduce any adverse impact of the COVID-19 pandemic on the progress of our clinical trials and other business initiatives.

Our results of operations for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 were not significantly impacted by the COVID-19 pandemic. However, the full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition in the future isremains unknown at this time and will depend on future developments that are highly unpredictable. Please refer to the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for further discussion of the risks we face as a result of the COVID-19 pandemic.

Financial Overview

Revenues

Our revenues to date consist primarily of license and royalty revenue resulting from the licensing of our NAV Technology ~~Platform.~~Platform and other intellectual property rights. We have not generated any revenues from commercial sales of our own products. If we fail to complete the development of our product candidates in a timely manner or obtain regulatory approval and adequate labeling, our ability to generate future revenues will be materially compromised.

We license our NAV Technology Platform and other intellectual property rights to other biotechnology and pharmaceutical ~~companies.~~companies, including collaborators for the joint development and commercialization of our product candidates. The terms of the licenses vary, and licenses may be exclusive or non-exclusive and may be sublicensable by the licensee. Licenses may grant intellectual property rights for purposes of internal and preclinical research and development only, or may include the rights, or options to obtain future rights, to commercialize drug therapies for specific diseases using the NAV Technology ~~Platform.~~Platform and other licensed rights. License agreements generally have a term at least equal to the life of the underlying patents, but are terminable at the option of the licensee. Consideration from licensees under our license agreements may include: (i) up-front and annual fees, (ii) ~~option fees to acquire additional licenses, (iii)~~ milestone payments based on the achievement of certain development and sales-based milestones, ~~by licensees, (iv)~~(iii) sublicense fees, ~~and (v)~~(iv) royalties on sales of licensed ~~products.~~products and (v) other consideration payable upon optional goods and services purchased by licensees.

Royalty revenue to date consists primarily of royalties on net sales of Zolgensma, which is marketed by Novartis Gene Therapies, Inc. (formerly AveXis, Inc.) (Novartis Gene Therapies), a wholly owned subsidiary of Novartis AG (Novartis), for the treatment of spinal muscular atrophy (SMA). Zolgensma is a licensed product under our license agreement with Novartis Gene Therapies for the development and commercialization of treatments for SMA.

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Future license and royalty revenues are dependent on the successful development and commercialization of licensed products, ~~by our licensees,~~ which is uncertain, and revenues may fluctuate significantly from period to period. Additionally, we may never receive consideration in our license agreements that is contemplated on option fees, development and sales-based milestone payments, royalties on sales of licensed products or sublicense fees, given the contingent nature of these payments. Our revenues are concentrated among a low number of licensees and licenses are terminable at the option of the licensee. The termination of our licenses by licensees may materially impact the amount of revenue we recognize in future periods.

Zolgensma Royalties

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treatment of spinal muscular atrophy (SMA). Zolgensma is a licensed product under our license agreement with Novartis Gene Therapies for the development and commercialization of treatments for SMA.

Collaboration and License Agreement with AbbVie

Effective in November 2021, we entered into a collaboration and license agreement with AbbVie Global Enterprises Ltd. (AbbVie), a subsidiary of AbbVie Inc., to jointly develop and commercialize RGX-314 (the AbbVie Collaboration Agreement). The AbbVie Collaboration Agreement may materially impact our future revenues, research and development expenses, other operating expenses and operating cash flows associated with the development and commercialization of RGX-314. For additional information regarding the AbbVie Collaboration Agreement, please refer to Note 8, “License and Collaboration Agreements—AbbVie Collaboration and License Agreement” to the accompanying unaudited consolidated financial statements.

Operating Expenses

Our operating expenses consist primarily of cost of revenues, research and development expenses and general and administrative expenses. Personnel costs including salaries, benefits, bonuses and stock-based compensation expense, comprise a significant component of research and development and general and administrative expenses. We allocate indirect expenses associated with our facilities, information technology costs, depreciation and other overhead costs between research and development and general and administrative categories based on employee headcount and the nature of work performed by each ~~employee.~~employee or using other reasonable allocation methodologies.

Cost of Revenues

Our cost of revenues consists primarily of upstream fees due to our licensors as a result of revenue generated from the licensing of our NAV Technology Platform and other intellectual property rights, including sublicense fees, milestone payments and royalties on net sales of licensed products. Sublicense fees are based on a percentage of license fees received by us from ~~NAV Technology Licensees~~licensees and are recognized in the period that the underlying license revenue is recognized. Milestone payments are payable to licensors upon the achievement of specified milestones by ~~NAV Technology Licensees~~licensees and are recognized in the period the milestone is achieved or deemed probable of achievement. Royalties are based on a percentage of net sales of licensed products by ~~NAV Technology Licensees~~licensees and are recognized in the period that the underlying sales occur. Future costs of revenues are uncertain due to the nature of our license agreements and significant fluctuations in cost of revenues may occur from period to period.

Research and Development Expense

Our research and development expenses consist primarily of:

•

salaries, wages and personnel-related costs, including benefits, travel and stock-based compensation, for our scientific personnel performing research and development activities;

•

costs related to executing preclinical studies and clinical trials;

•

costs related to acquiring, developing and manufacturing materials for preclinical studies and clinical trials;

•

fees paid to consultants and other third-parties who support our product candidate development;

•

other costs in seeking regulatory approval of our product candidates; and

•

direct costs and allocated costs related to laboratories and facilities, depreciation expense, ~~primarily consists of:~~

information technology and other overhead.

•

~~salaries and personnel-related costs, including benefits and stock-based compensation, for our scientific personnel performing research and development activities;~~

•

~~costs related to executing preclinical studies and clinical trials;~~

•

~~costs related to acquiring, developing and manufacturing materials for preclinical studies and clinical trials;~~

•

~~fees paid to consultants and other third-parties who support our product candidate development;~~

•

~~other costs in seeking regulatory approval of our product candidates; and~~

•

~~allocated facility-related costs, depreciation expense and other overhead.~~

Up-front fees incurred in obtaining technology licenses for research and development activities, as well as associated milestone payments, are ~~expensed~~charged to research and development expense as incurred if the technology licensed has no alternative future use.

We plan to increase our research and development expenses for the foreseeable future as we continue development of our product candidates. Our current and planned research and development activities include the following:

•

~~Continued development of RGX-314 products, including:~~

•

continued development of RGX-314 product candidates under our collaboration with AbbVie, including:

a Phase I/II clinical trial and associated long-term follow-up study to evaluate the safety and efficacy of the subretinal delivery of RGX-314 for the treatment of wet AMD;

~~pivotal trials (ATMOSPHERE and one additional pivotal trial) to evaluate the safety and efficacy of the subretinal delivery of RGX-314 for the treatment of wet AMD;~~

~~Phase II clinical trials to evaluate the safety and efficacy of the suprachoroidal delivery of RGX-314 using the SCS Microinjector for the treatment of wet AMD (AAVIATE) and DR (ALTITUDE);~~

•

~~preclinical research and development and a planned clinical trial for RGX-202 for the treatment of DMD;~~

•

~~Phase I/II clinical trials to evaluate the safety and efficacy of RGX-121 for the treatment of MPS II;~~

•

~~a Phase I/II clinical trial to evaluate the safety and efficacy of RGX-111 for the treatment of MPS I;~~

•

~~preclinical research and development and planned clinical trials for RGX-181 for the treatment of CLN2 disease, and RGX-381 for the treatment of ocular manifestations of CLN2 disease;~~

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pivotal trials (ATMOSPHERE and ASCENT) to evaluate the safety and efficacy of the subretinal delivery of RGX-314 for the treatment of wet AMD;

Phase II clinical trials to evaluate the safety and efficacy of the suprachoroidal delivery of RGX-314 using the SCS Microinjector for the treatment of wet AMD (AAVIATE) and DR (ALTITUDE); and

additional long-term follow-up and other studies associated with RGX-314.

•

a Phase I/II clinical trial to evaluate the safety and efficacy of RGX-202 for the treatment of Duchenne (AFFINITY DUCHENNE);

•

a pivotal Phase I/II/III clinical trial (CAMPSIITE) and a second Phase I/II clinical trial to evaluate the safety and efficacy of RGX-121 for the treatment of MPS II;

•

a Phase I/II clinical trial to evaluate the safety and efficacy of RGX-111 for the treatment of MPS I;

•

preclinical research and development for RGX-181 for the treatment of CLN2 disease and RGX-381 for the treatment of the ocular manifestations of CLN2 disease;

•

preclinical research and development for potential product candidates addressing other diseases across a range of therapeutics areas and other new technologies;

•

continued investment in advanced manufacturing analytics and process development activities; and

•

continued acquisition and manufacture of clinical trial materials in support of our anticipated clinical trials.

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~~preclinical research and development for potential product candidates to treat HAE;~~

•

~~preclinical research and development for potential product candidates to treat neurodegenerative diseases, including tauopathies and alpha-synucleinopathies, under our collaboration with Neurimmune;~~

•

~~preclinical research and development for potential product candidates addressing other diseases across a range of therapeutics areas and other new technologies;~~

•

~~continued investment in advanced manufacturing analytics and process development activities; and~~

•

~~continued acquisition and manufacture of clinical trial materials in support of our anticipated clinical trials.~~

The following table summarizes our research and development expenses incurred during the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Direct Expenses
RGX-314	$	6,714	$	6,472	$	17,963	$	16,189	$	11,835	$	6,714	$	33,967	$	17,963
RGX-202		2,831		3,713		6,607		8,080		4,674		2,831		8,381		6,607
RGX-121 and RGX-111		2,608		3,580		8,178		9,161		3,049		2,608		9,097		8,178
RGX-181 and RGX-381		191		1,767		1,078		3,958
Other product candidates		153		863		395		3,828		263		344		1,584		1,473
Total direct expenses		12,497		16,395		34,221		41,216		19,821		12,497		53,029		34,221
Unallocated Expenses
Platform and new technologies		9,471		8,731		25,931		20,910		12,743		9,471		38,811		25,931
Personnel-related		19,955		15,731		57,770		47,752		22,789		19,955		68,381		57,770
Facilities and depreciation expense		5,189		2,829		13,813		8,151		6,251		5,189		15,869		13,813
Other unallocated		743		282		1,724		1,085		1,709		743		3,858		1,724
Total unallocated expenses		35,358		27,573		99,238		77,898		43,492		35,358		126,919		99,238
Total research and development	$	47,855	$	43,968	$	133,459	$	119,114	$	63,313	$	47,855	$	179,948	$	133,459

Direct expenses related to the development of RGX-314 for the three and nine months ended September 30, 2022 include $4.2 million and $12.3 million, respectively, in net cost reimbursement from AbbVie under our eye care collaboration which was recorded as a reduction of research and development expenses during the periods. Platform and new technologies ~~include~~includes direct costs not identifiable with a specific lead product candidate, including costs associated with our research and development platform used across programs, process development, manufacturing analytics and early research and development for prospective product candidates and new technologies. We typically utilize our employee and infrastructure resources across our development programs. We do not allocate personnel and other internal costs, such as facilities and other overhead costs, to specific product candidates or development programs.

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General and Administrative Expense

Our general and administrative ~~expense consists~~expenses consist primarily of salaries, wages and personnel-related costs, including benefits, travel and stock-based compensation, for employees performing functions other than research and development. This includes certain personnel in executive, commercial, corporate development, finance, legal, human resources, information technology, facilities and administrative support functions. ~~Other~~Additionally, general and administrative expenses include facility-related and overhead costs not otherwise allocated to research and development expense, professional fees for accounting, legal, commercial and other advisory services, expenses associated with obtaining and maintaining patents, insurance costs, costs of our information systems and other ~~commercial and~~ general corporate activities. We expect that our general and administrative ~~expense~~expenses will continue to increase as we continue to develop, and potentially commercialize, our product candidates.

Other Income (Expense)

Interest Income from Licensing

In accordance with our revenue recognition policy, interest income from licensing consists of imputed interest recognized from significant financing components identified in our license agreements with NAV Technology Licensees as well as interest income accrued on unpaid balances due from licensees.

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Investment Income ~~(Loss)~~

Investment income consists of interest income earned and gains and losses realized from our cash equivalents, marketable securities and non-marketable equity securities, as well as unrealized gains and losses on marketable equity securities. Cash equivalents are comprised of money market mutual funds and highly liquid debt securities with original maturities of 90 days or less at acquisition. Marketable securities are comprised of available-for-sale debt securities and equity securities.

Interest Expense

Interest expense consists primarily of ~~non-cash~~ interest imputed on the liability related to the sale of future Zolgensma royalties to entities managed by Healthcare Royalty Management, LLC (collectively, HCR). ~~Non-cash interest~~Interest expense is recognized using the effective interest method, based on our estimate of total royalty payments expected to be received by HCR under the royalty purchase agreement. For further information regarding the royalty purchase agreement with HCR, please refer to Note 6, “Liability Related to Sale of Future Royalties” to the accompanying unaudited consolidated financial statements.

Critical Accounting Policies and ~~Significant Judgments and~~ Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities for the periods presented. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities, and other reported amounts, that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Our significant accounting policies are fully described in Note 2 to the accompanying unaudited consolidated financial statements and in Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. There have been no significant changes in our critical accounting policies and estimates since December 31, ~~2020.~~2021.

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Results of Operations

Our consolidated results of operations were as follows (in thousands):


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended September 30,									Nine Months Ended September 30,
	2021			2020			Change			2021			2020			Change			2022			2021			Change			2022			2021			Change
Revenues
License and royalty revenue	$	30,773		$	98,912		$	(68,139	)	$	71,692		$	133,122		$	(61,430	)	$	26,512		$	30,773		$	(4,261	)	$	81,379		$	71,692		$	9,687
Total revenues		30,773			98,912			(68,139	)		71,692			133,122			(61,430	)		26,512			30,773			(4,261	)		81,379			71,692			9,687
Operating Expenses
Cost of revenues		14,105			17,364			(3,259	)		28,775			25,457			3,318			13,094			14,105			(1,011	)		41,762			28,775			12,987
Research and development		47,855			43,968			3,887			133,459			119,114			14,345			63,313			47,855			15,458			179,948			133,459			46,489
General and administrative		21,030			15,859			5,171			57,293			46,246			11,047			20,921			21,030			(109	)		64,071			57,293			6,778
Provision for credit losses and other		5,131			7,770			(2,639	)		5,781			7,887			(2,106	)
Credit losses and other																				229			5,131			(4,902	)		703			5,781			(5,078	)
Total operating expenses		88,121			84,961			3,160			225,308			198,704			26,604			97,557			88,121			9,436			286,484			225,308			61,176
Income (loss) from operations		(57,348	)		13,951			(71,299	)		(153,616	)		(65,582	)		(88,034	)
Loss from operations																				(71,045	)		(57,348	)		(13,697	)		(205,105	)		(153,616	)		(51,489	)
Other Income (Expense)
Interest income from licensing		117			1,444			(1,327	)		700			4,141			(3,441	)		18			117			(99	)		265			700			(435	)
Investment income (loss)		5,535			(6,607	)		12,142			6,514			(4,071	)		10,585
Investment income																				1,497			5,535			(4,038	)		3,357			6,514			(3,157	)
Interest expense		(6,709	)		—			(6,709	)		(19,777	)		—			(19,777	)		(5,954	)		(6,709	)		755			(18,944	)		(19,777	)		833
Total other income (expense)		(1,057	)		(5,163	)		4,106			(12,563	)		70			(12,633	)		(4,439	)		(1,057	)		(3,382	)		(15,322	)		(12,563	)		(2,759	)
Income (loss) before income taxes		(58,405	)		8,788			(67,193	)		(166,179	)		(65,512	)		(100,667	)
Loss before income taxes																				(75,484	)		(58,405	)		(17,079	)		(220,427	)		(166,179	)		(54,248	)
Income Tax Benefit (Expense)		—			3			(3	)		(4	)		503			(507	)		—			—			—			41			(4	)		45
Net income (loss)	$	(58,405	)	$	8,791		$	(67,196	)	$	(166,183	)	$	(65,009	)	$	(101,174	)
Net loss																			$	(75,484	)	$	(58,405	)	$	(17,079	)	$	(220,386	)	$	(166,183	)	$	(54,203	)

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Comparison of the Three Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

License and Royalty Revenue. License and royalty revenue decreased by ~~$68.1~~$4.3 million, from ~~$98.9 million for the three months ended September 30, 2020 to~~ $30.8 million for the three months ended September 30, ~~2021.~~2021 to $26.5 million for the three months ended September 30, 2022. The decrease was primarily attributable to an $80.0 million milestone payment recognized as revenue in the third quarter of 2020 as a result of the achievement of $1.0 billion in cumulative net sales of Zolgensma during the period. The decrease was partially offset by an increase in Zolgensma royalty revenues, which ~~increased~~decreased by ~~$11.5~~$5.0 million, from ~~$18.8 million for the third quarter of 2020 to~~ $30.3 million for the third quarter of ~~2021.~~2021 to $25.2 million for the third quarter of 2022. As reported by Novartis, sales of Zolgensma for the third quarter of ~~2021 increased~~2022 decreased by ~~29%~~15% (USD) as compared to the third quarter of ~~2020,~~2021. Per Novartis, Zolgensma sales growth volatility is driven by ~~geographic expansion~~timing of ~~product access. The increase~~access and reimbursement decisions, as well as timing of prior year patient bolus in Zolgensma sales also resulted in a higher effective royalty rate in the third quarter of 2021 as compared to the third quarter of 2020, as royalty rates are tiered based on specified thresholds of annual net sales.certain markets.

Research and Development Expense. Research and development expenses increased by ~~$3.9~~$15.5 million, from~~$44.0~~ ~~million for the three months ended September 30, 2020 to~~ $47.9 million for the three months ended September 30, ~~2021.~~2021 to $63.3 million for the three months ended September 30, 2022. The increase was primarily attributable to the following:

•

an increase of $8.2 million in costs associated with clinical trial and regulatory activities for our lead product candidates, largely driven by RGX-314 clinical trials;

•

an increase of $6.4 million in manufacturing-related expenses, primarily related to clinical supply for our lead product candidates;

•

an increase of $2.8 million in personnel-related costs as a result of increased headcount of research and development personnel, including a $0.5 million increase in stock-based compensation expense, largely driven by the commencement of in-house manufacturing of clinical supply in 2022; and

•

an increase of $1.7 million in costs for laboratories and facilities used by research and development personnel, including a $0.8 million increase in depreciation expense allocated to research and development functions, largely driven by the occupation of our new corporate headquarters in mid-2021 and the activation of our cGMP facility in mid-2022.

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•

an increase of $4.2 million for personnel-related costs as a result of increased headcount of research and development personnel, including a $0.8 million increase in stock-based compensation expense; and

•

~~an increase of $3.3 million for laboratory costs and facilities used by research and development personnel, including depreciation expense allocated to research and development functions.~~

The increase in research and development expenses was partially offset by $4.2 million of net development cost reimbursement from AbbVie recorded in the third quarter of 2022 under our RGX-314 collaboration, which was recorded as a ~~$2.9 million decrease in external costs associated with preclinical studies and other early-stage~~reduction of research and development ~~and a~~ expenses.~~$1.6 million decrease in external costs associated with manufacturing-related activities.~~

General and Administrative Expense. General and administrative expenses ~~increased~~remained consistent, decreasing by ~~$5.2~~$0.1 million, from ~~$15.9 million for the three months ended September 30, 2020 to~~ $21.0 million for the three months ended September 30, ~~2021. The increase was primarily attributable~~2021 to ~~the following:~~

•

~~an increase of $2.3~~$20.9 million for ~~personnel-related costs as a result of increased headcount of general and administrative personnel, including a $0.9 million increase in stock-based compensation expense; and~~

•

~~an increase of $1.4 million for professional services, primarily related to legal and other advisory services.~~

~~Provision for Credit Losses and Other. Provision for credit losses and other decreased by $2.6 million during~~ the three months ended September 30, 2021 as compared to the three months ended September 30, 2020. We recognized a provision for credit losses of $5.0 million and $7.7 million during the quarters ended September 30, 2021 and 2020, respectively, related to our accounts receivable from Abeona Therapeutics Inc. (Abeona). As of September 30, 2021, we had recorded total accounts receivable from Abeona of $30.1 million and a related allowance for credit losses of $13.2 million. For further information regarding the provision for credit losses, refer to Note 8, “License and Royalty Revenue—Abeona Therapeutics Inc.” to the accompanying unaudited consolidated financial statements.2022.

Investment Income ~~(Loss)~~. Investment income ~~was~~decreased by $4.0 million, from $5.5 million for the three months ended September 30, 2021 ~~as compared~~ to ~~investment loss of $6.6~~$1.5 million for the three months ended September 30, ~~2020, a change of $12.1 million.~~2022. The ~~change~~decrease was primarily attributable to a realized gain of $5.2 million recognized in the third quarter of 2021 upon the acquisition of our non-marketable equity securities of Corlieve Therapeutics SAS (Corlieve) by uniQure N.V. (uniQure) in July 2021, and net losses of $7.5 million recognized in the third quarter of 2020 related to our marketable equity securities of Prevail Therapeutics Inc. (Prevail). We sold all of our Prevail equity securities prior to the end of 2020.2021. The ~~change~~decrease in investment income was partially offset by ~~a decrease~~an increase of ~~$0.5~~$1.2 million in interest income for the third quarter of ~~2021,~~2022, primarily attributable to ~~lower~~higher yields on investments in cash equivalents and marketable debt securities.

~~Interest Expense~~. Interest expense increased from zero for the three months ended September 30, 2020 to $6.7 million for the three months ended September 30, 2021. Interest expense consists solely of non-cash interest recognized under our royalty purchase agreement with HCR for the sale of future Zolgensma royalties which occurred in December 2020.

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Comparison of the Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

License and Royalty Revenue. License and royalty revenue ~~decreased~~increased by ~~$61.4~~$9.7 million, from ~~$133.1 million for the nine months ended September 30, 2020 to~~ $71.7 million for the nine months ended September 30, ~~2021.The decrease was primarily attributable~~2021 to an $80.0 million milestone payment recognized as revenue in the third quarter of 2020 as a result of the achievement of $1.0 billion in cumulative net sales of Zolgensma during the period. The decrease was partially offset by an increase in Zolgensma royalty revenues, which increased by $26.2 million, from $40.7$81.4 million for the nine months ended September 30, ~~2020~~2022.The increase was primarily attributable to Zolgensma royalty revenues, which increased by $8.2 million, from $66.9 million for the nine months ended September 30, ~~2021.~~2021 to $75.1 million for the nine months ended September 30, 2022. As reported by Novartis, sales of Zolgensma for the nine months ended September 30, ~~2021~~2022 increased by ~~52%~~5% (USD) as compared to the nine months ended September 30, ~~2020,~~2021, driven by geographic expansion of product ~~access.~~access outside the United States. Per Novartis, Zolgensma sales growth volatility is driven by timing of access and reimbursement decisions, as well as timing of prior year patient bolus in certain markets.

~~Research and Development Expense.~~Cost of Revenues. ~~Research and development expenses~~Cost of revenues increased by ~~$14.3~~$13.0 million, from ~~$119.1~~ $28.8 million for the nine months ended September 30, ~~2020~~2021 to $41.8 million for the nine months ended September 30, 2022. The increase was primarily attributable to a non-recurring charge of $9.2 million recognized in the first quarter of 2022 related to the amendment of our license agreement with The Trustees of the University of Pennsylvania (Penn) to buy out our obligation to pay sublicense fees to Penn under the license agreement. For further information regarding the amendment of the license agreement with Penn, please refer to Note 7, “Commitments and Contingencies” to the accompanying unaudited consolidated financial statements.

Research and Development Expense. Research and development expenses increased by $46.5 million, from $133.5 million for the nine months ended September 30, ~~2021.~~2021 to $179.9 million for the nine months ended September 30, 2022. The increase was primarily attributable to the following:

•

an increase of $24.4 million in costs associated with clinical trial and regulatory activities for our lead product candidates, largely driven by RGX-314 clinical trials;

•

an increase of $14.4 million in manufacturing-related expenses, primarily related to clinical supply for our lead product candidates;

•

an increase of $10.6 million in personnel-related costs as a result of increased headcount of research and development personnel, including a $1.4 million increase in stock-based compensation expense, largely driven by the commencement of in-house manufacturing of clinical supply in 2022; and

•

an increase of $6.1 million in costs for laboratories and facilities used by research and development personnel, including a $1.8 million increase in depreciation expense allocated to research and development functions, largely driven by the occupation of our new corporate headquarters in mid-2021 and the activation of our cGMP facility in mid-2022.

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•

an increase of $10.0 million for personnel-related costs as a result of increased headcount of research and development personnel, including a $2.6 million increase in stock-based compensation expense;

•

an increase of $5.6 million for external costs associated with clinical trial and regulatory activities for our lead product candidates, primarily attributable to RGX-314 and RGX-121 clinical trials; and

•

~~an increase of $5.8 million for laboratory costs and facilities used by research and development personnel, including depreciation expense allocated to research and development functions.~~

The increase in research and development expenses was partially offset by $12.3 million of net development cost reimbursement from AbbVie recorded during the nine months ended September 30, 2022 under our RGX-314 collaboration, which was recorded as a ~~$8.1 million decrease in external costs associated with manufacturing-related activities, primarily attributable to manufacturing~~reduction of ~~RGX-314~~research and ~~RGX-121 clinical supply performed in 2020 for material to be used in our current and planned clinical trials for these product candidates.~~development expenses.

General and Administrative Expense. General and administrative expenses increased by ~~$11.0~~$6.8 million, from ~~$46.2 million for the nine months ended September 30, 2020 to~~ $57.3 million for the nine months ended September 30, ~~2021.~~2021 to $64.1 million for the nine months ended September 30, 2022. The increase was primarily attributable to the following:

•

an increase of ~~$4.8 million for personnel-related costs as a result of increased headcount of general and administrative personnel, including a $2.7 million increase in stock-based compensation expense;~~

•

~~an increase of $3.7 million for professional services, primarily related to legal and other advisory services; and~~

•

~~an increase of $1.1 million for facilities used by general and administrative personnel, including depreciation expense allocated to general and administrative functions.~~

~~Provision for Credit Losses and Other. Provision for credit losses and other decreased by~~ $2.1 million ~~during~~in personnel-related costs as a result of increased headcount of general and administrative personnel, including a $0.3 million increase in stock-based compensation expense; and

•

an increase of $1.0 million for net cost reimbursement to AbbVie for commercialization and general and administrative activities performed under our RGX-314 collaboration.

The remaining $3.7 million increase in general and administrative expenses for the nine months ended September 30, ~~2021 as compared~~2022 was primarily attributable to ~~the nine months ended September 30, 2020. We recognized a provision for credit losses of $5.5 million~~travel and ~~$7.7 million during the nine months ended September 30, 2021~~meeting-related expenses, information technology and 2020, respectively, related to our accounts receivable from Abeona. As of September 30, 2021, we had recorded total accounts receivable from Abeona of $30.1 million and a related allowance for credit losses of $13.2 million. For further information regarding the provision for credit losses, refer to Note 8, “License and Royalty Revenue—Abeona Therapeutics Inc.” to the accompanying unaudited consolidated financial statements.other corporate overhead costs.

Investment Income ~~(Loss)~~. Investment income ~~was~~decreased by $3.2 million, from $6.5 million for the nine months ended September 30, 2021 ~~as compared~~ to ~~investment loss of $4.1~~$3.4 million for the nine months ended September 30, ~~2020, a change of $10.6 million.~~2022. The ~~change~~decrease was primarily attributable to a realized gain of $5.2 million recognized in the third quarter of 2021 upon the acquisition of our ~~non-marketable~~Corlieve equity securities ~~of Corlieve~~ by uniQure in July ~~2021, and net losses~~2021. The decrease in investment income was partially offset by an increase of ~~$8.3~~$2.1 million ~~recognized~~in interest income during the nine months ended September 30, 2020 related to our marketable equity securities of Prevail. We sold all of our Prevail equity securities prior to the end of 2020. The change in investment income was partially offset by a decrease of $2.8 million in interest income for the nine months ended September 30, 2021,2022, primarily attributable to ~~lower~~higher yields on investments in cash equivalents and marketable debt securities.

~~Interest Expense~~. Interest expense increased from zero for the nine months ended September 30, 2020 to $19.8 million for the nine months ended September 30, 2021. Interest expense consists solely of non-cash interest recognized under our royalty purchase agreement with HCR for the sale of future Zolgensma royalties which occurred in December 2020.

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Liquidity and Capital Resources

Sources of Liquidity

As of September 30, ~~2021,~~2022, we had cash, cash equivalents and marketable securities of ~~$533.5~~$617.0 million, which were primarily derived from the sale of our common stock, license and royalty revenue and the monetization of our Zolgensma royalty stream. We expect that our cash, cash equivalents and marketable securities as of September 30, ~~2021,~~2022, will enable us to fund our operating expenses and capital expenditure requirements, and are sufficient to meet our financial commitments and obligations, for at least the next 12 months from the date of this report, based on our current business plan.

In January 2021, we completed a public offering of 4,899,000 shares of our common stock (inclusive of 639,000 shares pursuant to the full exercise by the underwriters of their option to purchase additional shares) at a price of $47.00 per share. The aggregate net proceeds from the offering, inclusive of the underwriters’ option exercise, were $216.1 million, net of underwriting discounts and commissions and offering expenses payable by us.

We intend to devote the majority of our current capital to clinical development, seeking regulatory approval of our product candidates and additional capital expenditures needed to ~~build out additional office, laboratory and manufacturing capacity, including the buildout of our corporate, manufacturing and research headquarters in Rockville, Maryland.~~support these activities. Because of the numerous risks and uncertainties associated with the development and commercialization of gene therapy product candidates, we are unable to estimate the total amount of operating expenditures and capital outlays necessary to complete the development of our product candidates. Additionally, our estimates are based on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Furthermore, given the continuing uncertainty and volatile market and economic conditions caused by the COVID-19 pandemic, as well as the potential for further effects due to a resurgence in COVID-19 infections, we will continue to monitor the nature and extent of the impact of the COVID-19 pandemic on our liquidity and capital resources.

Cash Flows

Our consolidated cash flows were as follows (in thousands):

Nine Months Ended September 30,

2021

2020

Net cash used in operating activities

$
(107,362
)

$
(93,529
)
Net cash provided by (used in) investing activities

(190,283
)

111,189

Net cash provided by financing activities

187,606

6,046

Net increase (decrease) in cash and cash equivalents and restricted cash

$
(110,039
)

$
23,706


	Nine Months Ended September 30,
	2022			2021
Net cash used in operating activities	$	(168,116	)	$	(122,622	)
Net cash used in investing activities		(38,629	)		(190,283	)
Net cash provided by (used in) financing activities		(19,920	)		202,866
Net decrease in cash and cash equivalents and restricted cash	$	(226,665	)	$	(110,039	)

Cash Flows from Operating Activities

Our net cash used in operating activities for the nine months ended September 30, ~~2021~~2022 increased by ~~$13.8~~$45.5 million from the nine months ended September 30, ~~2020.~~2021. The increase was largely driven by an increase in operating expenses ~~of $26.6 million in 2021.~~for the nine months ended September 30, 2022. We expect to continue to incur regular net cash outflows from operations for the foreseeable future as we continue the development and advancement of our ~~lead~~ product candidates and other research programs.

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For the nine months ended September 30, 2022, our net cash used in operating activities of $168.1 million consisted of a net loss of $220.4 million, offset by adjustments for non-cash items of $45.1 million and favorable changes in working capital of $7.2 million. Adjustments for non-cash items primarily consisted of stock-based compensation expense of $31.4 million and depreciation and amortization expense of $8.8 million. The changes in working capital include a net decrease in total accounts payable and accrued expenses and other current liabilities of $11.4 million primarily attributable to decreases in accrued personnel costs, accrued sublicense fees and royalties, and income taxes payable. The favorable changes in working capital were partially offset by an increase in other liabilities of $7.9 million primarily attributable to a long-term liability recorded during the period related to the amendment of our license agreement with Penn. Other changes in working capital were incurred in the normal course of business.

For the nine months ended September 30, 2021, our net cash used in operating activities of ~~$107.4~~$122.6 million consisted of a net loss of $166.2 million and unfavorable changes in working capital of $1.9 million, offset by ~~$60.7~~$45.4 million in adjustments for non-cash items. The changes in working capital include a $7.9 million increase in accounts receivable ~~which was largely driven by~~primarily attributable to an increase in Zolgensma royalties receivable at the end of the period, and a $7.9 million increase in prepaid expenses ~~which was largely driven by~~primarily attributable to advances paid during the period to service providers for clinical trial and manufacturing-related services to be performed in future periods. The unfavorable changes in working capital were partially offset by an increase in operating lease liabilities of $10.8 million ~~which was largely driven by~~primarily attributable to funds received under our tenant improvement allowance ~~related to~~for the ~~ongoing~~ buildout of our new headquarters facility in Rockville, Maryland. Other changes in working capital were incurred in the normal course of ~~business, primarily as a result of differences in the timing of payments to service providers and the period in which such costs are incurred.~~business. Adjustments for non-cash items primarily consisted of stock-based compensation expense of $29.6 ~~million, non-cash interest expense recognized under our royalty purchase agreement with HCR of $19.8~~ million, depreciation and amortization expense of $7.0 million, a provision for credit losses of $5.5 million, non-cash interest expense of $4.5 million recognized under our royalty purchase agreement with HCR and net amortization of premiums on marketable debt securities of $4.4 million. ~~Adjustments for non-cash items were partially offset by a realized gain of $5.2 million recognized upon the acquisition of our Corlieve equity securities by uniQure in July 2021.~~

Cash Flows from Investing Activities

For the nine months ended September 30, ~~2020,~~2022, our net cash used in ~~operating~~investing activities of $93.5 million consisted of a net loss of $65.0 million and changes in working capital of $73.9 million, offset by $45.4 million in adjustments for non-cash items. The changes in working capital include an increase in accounts receivable of $89.4 million which was largely driven by an increase in Zolgensma royalties receivable at the end of the period, and an $80.0 million sales-based milestone fee earned during the third quarter which was recorded in accounts receivable at the end of the period. Other changes in working capital were incurred in the normal

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~~course of business, primarily as a result of differences in the timing of payments to service providers and the period in which such costs are incurred. Adjustments for non-cash items~~ primarily consisted of ~~stock-based compensation expenses~~$172.9 million to purchase marketable debt securities and $25.3 million to purchase property and equipment, partially offset by $159.0 million in maturities of $24.4 million, depreciation and amortization expense of $6.3 million, net losses on our Prevail equity securities of $8.3 million and a provision for credit losses on accounts receivable of $7.7 million.marketable debt securities.

~~Cash Flows from Investing Activities~~

For the nine months ended September 30, 2021, our net cash used in investing activities consisted of $262.7 million to purchase marketable debt securities and $69.6 million to purchase property and equipment, offset by $136.4 million in maturities of marketable debt securities and $5.6 million of proceeds received from the acquisition of our Corlieve equity securities by uniQure in July 2021.

The ~~substantial~~ majority of our capital expenditures for the nine months ended September 30, 2022 and 2021 were related to the build out of our corporate, manufacturing and research headquarters ~~at 9804 Medical Center Drive~~ in Rockville, ~~Maryland. We~~Maryland, including our cGMP facility. The buildout of this facility was completed in the first half of 2022. As a result, we expect capital expenditures ~~related to this project to continue~~ for the ~~remainder of 2021 and into~~year ended 2022 ~~as we complete build out of this facility.~~ ~~Total remaining capital expenditures to complete the build out of the facility, net of remaining amounts~~ to be reimbursed by the landlord under our tenant improvement allowance, are expected to be in the low to mid-double-digit millions (USD). However, the actual amount and timing of these capital expenditures are uncertain and may differ materiallylower than 2021.

Cash Flows from ~~our current estimates.~~Financing Activities

For the nine months ended September 30, ~~2020,~~2022, our net cash ~~provided by investing~~used in financing activities primarily consisted of ~~$204.5~~$24.1 million of Zolgensma royalties paid, net of imputed interest, under our royalty purchase agreement with HCR, and was partially offset by $4.5 million in ~~sales~~proceeds received from the exercise of stock options and ~~maturities~~issuance of ~~marketable securities, offset by $79.4 million to~~common stock under our employee stock purchase ~~marketable debt securities and $14.0 million to purchase property and equipment.~~plan.

~~Cash Flows from Financing Activities~~

For the nine months ended September 30, 2021, our net cash provided by financing activities primarily consisted of $216.1 million in net proceeds received from a public offering of our common stock completed in January 2021, net of underwriting discounts and commissions and other offering expenses paid during the period, and ~~$5.1 million in proceeds received from the exercise of stock options and issuance of common stock under our employee stock purchase plan, and~~ was partially offset by ~~$33.3~~$18.0 million of Zolgensma royalties paid, ~~to HCR during the period~~net of imputed interest, under our royalty purchase ~~agreement.~~agreement with HCR.

~~For~~Additional Capital Requirements

Our material capital requirements from known contractual and other obligations primarily relate to vendor service contracts and purchase commitments, in-license agreements, operating lease agreements and our Zolgensma royalty purchase agreement with HCR. Our material commitments and obligations are further described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the ~~nine months~~year ended ~~September 30, 2020, net cash provided by financing activities consisted~~December 31, 2021, and in the notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. Other than the changes described in the notes to the unaudited consolidated financial statements accompanying this Quarterly Report on Form 10-Q, including Note 7, “Commitments and Contingencies,” there have been no material changes to our commitments and obligations since December 31, 2021.

Table of ~~$6.0 million in proceeds received from the exercise of stock options and issuance of common stock under our employee stock purchase plan.~~Contents

Future Funding Requirements

We have incurred cumulative losses since our inception and had an accumulated deficit of ~~$455.3~~$381.6 million as of September 30, ~~2021.~~2022. Our transition to recurring profitability is dependent upon achieving a level of revenues adequate to support our cost structure, which depends heavily on the successful development, approval and commercialization of our product candidates. We do not expect to achieve such revenues, and expect to continue to incur losses, for at least the next several years. We expect that our research and development and general and administrative expenses will continue to increase for the foreseeable future as we continue the development of, and seek regulatory approval for, our product candidates. S~~ubject~~Subject to obtaining regulatory approval for our product candidates, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. Additionally, we expect ~~our~~to continue to incur capital expenditures ~~will continue to increase due to costs~~ associated with building out additional ~~office,~~ laboratory and manufacturing capacity to further support the development of our product candidates and potential commercialization ~~efforts, particularly with respect to the build out of our corporate, manufacturing and research headquarters as discussed above.~~ efforts. As a result, we will need significant additional capital to fund our operations, which we may obtain through one or more equity offerings, debt financings or other third-party funding, including potential strategic alliances and licensing or collaboration arrangements.

Our future capital requirements will depend on many factors, including:

•

the timing of enrollment, commencement and completion of our clinical trials;

•

the results of our clinical trials;

•

the results of our preclinical studies for our product candidates and any subsequent clinical trials;

•

the scope, progress, results and costs of drug discovery, laboratory testing, preclinical development and clinical trials for our product candidates;

•

the costs associated with building out additional laboratory and manufacturing capacity;

•

the costs, timing and outcome of regulatory review of our product candidates;

•

the costs of future product sales, medical affairs, marketing, manufacturing and distribution activities for any of our product candidates for which we receive marketing approval;

•

revenue, if any, received from commercial sales of our products, should any of our product candidates receive marketing approval;

•

revenue received from commercial sales of Zolgensma and other revenue, if any, received in connection with commercial sales of our licensees’ and collaborators’ products, should any of their product candidates receive marketing approval;

•

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;

•

our current licensing agreements or collaborations remaining in effect, including the AbbVie Collaboration Agreement;

•

our ability to establish and maintain additional licensing agreements or collaborations on favorable terms, if at all; and

•

the extent to which we acquire or in-license other product candidates and technologies.

•

~~the anticipated completion of our proposed transaction with AbbVie and the outcome of our proposed collaboration with AbbVie;~~

•

~~the timing of enrollment, commencement and completion of our clinical trials;~~

•

~~the results of our clinical trials;~~

•

~~the results of our preclinical studies for our product candidates and any subsequent clinical trials;~~

•

~~the scope, progress, results and costs of drug discovery, laboratory testing, preclinical development and clinical trials for our product candidates;~~

•

~~the costs associated with building out additional laboratory and manufacturing capacity;~~

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•

~~the costs, timing and outcome of regulatory review of our product candidates;~~

•

~~the costs of future product sales, medical affairs, marketing, manufacturing and distribution activities for any of our product candidates for which we receive marketing approval;~~

•

~~revenue, if any, received from commercial sales of our products, should any of our product candidates receive marketing approval;~~

•

revenue received from commercial sales of Zolgensma and other revenue, if any, received in connection with commercial sales of our NAV Technology Licensees’ products, should any of their product candidates receive marketing approval;

•

~~the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;~~

•

~~our current licensing agreements or collaborations remaining in effect;~~

•

~~our ability to establish and maintain additional licensing agreements or collaborations on favorable terms, if at all; and~~

•

~~the extent to which we acquire or in-license other product candidates and technologies.~~

Many of these factors are outside of our control. Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory and marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our product revenues, if any, and any commercial milestones or royalty payments under our licensing agreements, will be derived from or based on sales of products ~~the majority of which~~that may not be commercially available for many years, if at all. In addition, revenue from our NAV Technology Platform ~~sublicensing~~licensing is dependent in part on the clinical and commercial success of our licensing ~~partners.~~partners, including the commercialization of Zolgensma. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.

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The issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline. Adequate additional financing may not be available to us on acceptable terms, or at all. We also could be required to seek funds through arrangements with partners or otherwise that may require us to relinquish rights to our intellectual property, our product candidates or otherwise agree to terms unfavorable to us.

~~Contractual Obligations, Commitments and Contingencies~~

There have been no material changes to our contractual obligations, commitments and contingencies as of September 30, 2021 from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

For information regarding market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. There have been no material changes to our exposure to market risk during the nine months ended September 30, ~~2021.~~2022.

Item 4. Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, ~~2021.~~2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

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Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, ~~2021,~~2022, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.

Table of Contents

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

~~For information regarding our~~From time to time, we are party to various lawsuits, claims or other legal proceedings ~~with Abeona Therapeutics Inc., please refer~~that arise in the normal course of our business. We do not believe that we are currently party to ~~Note 8, “License and Royalty Revenue—Abeona Therapeutics Inc.,”~~any pending legal actions that could reasonably be expected to ~~the accompanying unaudited consolidated~~have a material adverse effect on our business, financial ~~statements.~~condition, results of operations or cash flows.

Item 1A. Risk Factors.

Our material risk factors are disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020 and Quarterly Report on Form 10-Q for the quarter ended June 30,~~ 2021. There have been no material changes from the risk factors previously disclosed in such ~~filings, except as follows:~~

~~Risks Related to Third Parties~~

We have in the past, and in the future may, enter into licensing agreements or collaborations with third parties licensing parts of our NAV Technology Platform for the development of product candidates. If these licensing arrangements or collaborations are not successful, our business could be harmed.

We have entered into agreements involving the licensing of parts of our NAV Technology Platform and relating to the development and commercialization of certain product candidates and plan to enter into additional licensing agreements or collaborations in the future. We have limited control over the amount and timing of resources that our current and future licensees and collaborators, including our NAV Technology Licensees, dedicate to the development or commercialization of product candidates or of products utilizing licensed components of our NAV Technology Platform. Our ability to generate revenues from these arrangements will depend on our and our licensees’ and collaborators’ abilities to successfully perform the functions assigned to each of us in these arrangements. In addition, our licensees and collaborators have the ability to abandon research or development projects and terminate applicable agreements. Moreover, an unsuccessful outcome in any clinical trial for which our licensee or collaborator is responsible could be harmful to the public perception and prospects of our NAV Technology Platform or product candidates.

In September 2021, we entered into a Collaboration and License Agreement with AbbVie Global Enterprises Ltd. (AbbVie), a subsidiary of AbbVie Inc., to develop and commercialize RGX-314 (the AbbVie Collaboration and License Agreement). The transaction is contingent upon the satisfaction of customary closing conditions, including the expiration or termination of the applicable waiting or suspension period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, and any other applicable competition laws. If the transaction contemplated by the AbbVie Collaboration and License Agreement is not consummated or is delayed, our expectations regarding future revenues, research and development costs, other operating expenses and operating cash flows associated with the development and commercialization of RGX-314 would be materially affected. For additional information regarding the AbbVie Collaboration and License Agreement, please refer to Note 8, “License and Royalty Revenue—Collaboration and License Agreement with AbbVie” to the accompanying unaudited consolidated financial statements.

~~Any current or future licensing agreements or future collaborations we enter into may pose additional risks, including the following:~~

•filing.

~~subjects in clinical trials undertaken by licensees or future collaborators, including our NAV Technology Licensees, may suffer adverse effects, including death;~~

•

licensees or collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the licensees’ or collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities;

•

we may not have access to, or may be restricted from disclosing, certain information regarding product candidates being developed or commercialized under a collaboration and, consequently, may have limited ability to inform our stockholders about the status of such product candidates;

•

licensees or collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the licensees or collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

•

product candidates developed in collaboration with us may be viewed by our licensees or collaborators as competitive with their own product candidates or products, which may cause licensees or collaborators to cease to devote resources to the commercialization of our product candidates;

•

a licensee or collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of any such product candidate;

~~Table of Contents~~

•

licensees or collaborators may breach their reporting, payment, intellectual property or other obligations to us, which could prevent us from complying with our contractual obligations to GSK and Penn;

•

disagreements with licensees or collaborators, including disagreements over intellectual property and other proprietary rights, payment obligations, contract interpretation or the preferred course of development of any product candidates, may cause delays or termination of the research, development or commercialization of such product candidates, may lead to additional responsibilities for us with respect to such product candidates or may result in litigation or arbitration, any of which would be time-consuming and expensive and could potentially lessen the value of such agreements and collaborations;

•

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

•

~~disputes may arise with respect to the ownership of our other rights to intellectual property developed pursuant to our licensing agreements or collaborations;~~

•

~~licensees or collaborators may infringe or otherwise violate the intellectual property rights of third parties, which may expose us to litigation and potential liability; and~~

•

licensing agreements or collaborations may be terminated for the convenience of the licensee or collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.

If our licensing agreements or collaborations do not result in the successful development and commercialization of products, or if one of our licensees or collaborators terminates its agreement with us, we may not receive any future milestone or royalty payments, as applicable, under the license agreement or collaboration. If we do not receive the payments we expect under these agreements, our development of product candidates could be delayed and we may need additional resources to develop our product candidates. In addition, if one of our licensees or collaborators terminates its agreement with us, we may find it more difficult to attract new licensees or collaborators and the perception of us in the business and financial communities could be harmed. Each of our licensees and collaborators is subject to similar risks with respect to product development, regulatory approval and commercialization, and any such risk could result in its business being harmed, which could adversely affect our collaboration.

~~We may in the future decide to partner or collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of our product candidates.~~ These relationships, or those like them, may require us to incur non-recurring and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business. In addition, we could face significant competition in seeking appropriate collaborators and the negotiation process is time-consuming and complex. Our ability to reach a definitive licensing agreement or collaboration agreement will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a variety of factors.

We may not be successful in our efforts to establish such a strategic partnership or other alternative arrangements for our product candidates because our research and development pipeline may be insufficient, our product candidates may be deemed to be at too early of a stage of development for collaborative effort or third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy or market opportunity. In addition, we may be restricted under existing collaboration agreements from entering into future agreements with potential collaborators. If we license rights to product candidates, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate the licensed product candidates with our existing operations.

If we are unable to reach agreements with suitable licensees or collaborators on a timely basis, on acceptable terms or at all, we may have to curtail the development of a product candidate, reduce or delay its development program, delay its potential commercialization, reduce the scope of any sales or marketing activities or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to fund development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all.

~~Table of Contents~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

3735

Table of Contents

Item 6. Exhibits.

Incorporated by Reference

Exhibit

Number

Description

Form

Exhibit

Number

Filing Date

Filed or

Furnished

Herewith

Description

Form

Exhibit

Number

Filing Date

Filed or

Furnished

Herewith

3.1

Restated Certificate of Incorporation

8-K

3.1

6/7/21

Restated Certificate of Incorporation

8-K

3.1

6/7/21

3.2

Amended and Restated Bylaws

8-K

3.2

9/22/15

Amended and Restated Bylaws

8-K

3.2

9/22/15

10.1†

Collaboration and License Agreement dated September 10, 2021 between the Company and AbbVie Global Enterprises Ltd.

31.1

Certification of the Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Chief Financial Officer as required by Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certifications of the Chief Executive Officer and Chief Financial Officer as required by 18 U.S.C. 1350

101

The following materials from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021 formatted in Inline XBRL (eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets

(ii) Consolidated Statements of Operations and Comprehensive Income (Loss)

(iii) Consolidated Statements of Stockholders’ Equity

(iv) Consolidated Statements of Cash Flows

(v) Notes to Consolidated Financial Statements

The following materials from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2022 formatted in Inline XBRL (eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets

(ii) Consolidated Statements of Operations and Comprehensive Loss

(iii) Consolidated Statements of Stockholders’ Equity

(iv) Consolidated Statements of Cash Flows

(v) Notes to Consolidated Financial Statements

104

The cover page from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021 formatted in Inline XBRL (included in Exhibit 101)

The cover page from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2022 formatted in Inline XBRL (included in Exhibit 101)

†~~Portions of this exhibit have been omitted.~~

The certification attached as Exhibit 32.1 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the SEC and is not to be incorporated by reference into any filing of REGENXBIO Inc. under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

3836

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		REGENXBIO Inc.

Dated: November ~~2, 2021~~3, 2022		/s/ Kenneth T. Mills
		Kenneth T. Mills
		President and Chief Executive Officer (Principal Executive Officer)


Dated: November ~~2, 2021~~3, 2022		/s/ Vittal Vasista
		Vittal Vasista
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)


Delaware		47-1851754
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9804 Medical Center Drive Rockville, MD		20850
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	RGNX	The Nasdaq Global Select Market


	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	228,387		$	338,426		$	118,544		$	345,209
Marketable securities		111,473			137,314			263,874			112,230
Accounts receivable, net		46,017			42,999			32,549			32,439
Prepaid expenses		18,401			10,505			14,824			18,752
Other current assets		5,886			1,953			6,848			10,196
Total current assets		410,164			531,197			436,639			518,826
Marketable securities		193,640			46,809			234,594			391,907
Accounts receivable, net		2,730			3,267			1,803			2,262
Property and equipment, net		122,231			56,467			140,906			131,547
Operating lease right-of-use assets		61,742			63,815			59,471			60,904
Restricted cash		1,330			1,330			2,030			2,030
Other assets		8,558			5,279			8,350			6,428
Total assets	$	800,395		$	708,164		$	883,793		$	1,113,904
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	19,845		$	10,622		$	25,210		$	11,387
Accrued expenses and other current liabilities		49,694			49,082			44,462			76,111
Deferred revenue		395			449			5,903			3,333
Operating lease liabilities		1,329			2,500			3,608			1,752
Liability related to sale of future royalties		35,508			18,794			44,365			37,889
Total current liabilities		106,771			81,447			123,548			130,472
Deferred revenue		3,531			3,783
Operating lease liabilities		83,880			70,153			84,673			84,929
Liability related to sale of future royalties		144,315			174,504			103,084			133,460
Other liabilities		484			524			8,664			745
Total liabilities		338,981			330,411			319,969			349,606
Stockholders’ equity
Preferred stock; $0.0001 par value; 10,000 shares authorized, and 0 shares issued and outstanding at September 30, 2021 and December 31, 2020		—			—
Common stock; $0.0001 par value; 100,000 shares authorized at September 30, 2021 and December 31, 2020; 42,752 and 37,476 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		4			4
Preferred stock; $0.0001 par value; 10,000 shares authorized, no shares issued and outstanding at September 30, 2022 and December 31, 2021								—			—
Common stock; $0.0001 par value; 100,000 shares authorized at September 30, 2022 and December 31, 2021; 43,292 and 42,831 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively								4			4
Additional paid-in capital		917,950			667,181			963,694			928,095
Accumulated other comprehensive loss		(1,285	)		(360	)		(18,256	)		(2,569	)
Accumulated deficit		(455,255	)		(289,072	)		(381,618	)		(161,232	)
Total stockholders’ equity		461,414			377,753			563,824			764,298
Total liabilities and stockholders’ equity	$	800,395		$	708,164		$	883,793		$	1,113,904


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2022			2021
Cash flows from operating activities
Net loss	$	(166,183	)	$	(65,009	)	$	(220,386	)	$	(166,183	)
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation expense		29,646			24,368			31,380			29,646
Depreciation and amortization		6,958			6,302			8,783			6,958
Provision for credit losses		5,532			7,678			—			5,532
Net amortization of premiums on marketable debt securities		4,377			586			3,809			4,377
Net losses (gains) on investments		(5,189	)		8,207
Net loss (gain) on investments								79			(5,189	)
Imputed interest income from licensing		(341	)		(2,033	)		(264	)		(341	)
Non-cash interest expense		19,777			—			767			4,517
Other non-cash adjustments		(51	)		263			540			(51	)
Changes in operating assets and liabilities
Accounts receivable		(7,886	)		(89,442	)		(22	)		(7,886	)
Prepaid expenses		(7,896	)		(9,637	)		3,928			(7,896	)
Other current assets		(3,307	)		(2,998	)		2,751			(3,307	)
Operating lease right-of-use assets		3,780			1,986			3,083			3,780
Other assets		(4,402	)		1,318			(1,922	)		(4,402	)
Accounts payable		6,503			9,907			16,883			6,503
Accrued expenses and other current liabilities		473			18,400			(28,241	)		473
Deferred revenue								2,824			—
Operating lease liabilities		10,849			(2,222	)		(50	)		10,849
Other liabilities		(2	)		(1,203	)		7,942			(2	)
Net cash used in operating activities		(107,362	)		(93,529	)		(168,116	)		(122,622	)
Cash flows from investing activities
Purchases of marketable debt securities		(262,671	)		(79,374	)		(172,910	)		(262,671	)
Maturities of marketable debt securities		136,386			189,882			159,011			136,386
Sales of marketable debt securities		—			2,287
Sales of equity securities		5,563			12,374			524			5,563
Purchases of property and equipment		(69,561	)		(13,980	)		(25,254	)		(69,561	)
Net cash provided by (used in) investing activities		(190,283	)		111,189
Net cash used in investing activities								(38,629	)		(190,283	)
Cash flows from financing activities
Proceeds from exercise of stock options		3,296			4,247			2,761			3,296
Taxes paid related to net settlement of stock-based awards								(284	)		—
Proceeds from issuance of common stock under employee stock purchase plan		1,768			1,799			1,742			1,768
Proceeds from public offering of common stock, net of underwriting discounts and commissions		216,438			—			—			216,438
Issuance costs for public offering of common stock		(379	)		—			—			(379	)
Repayments under liability related to sale of future royalties		(33,252	)		—
Repayments under liability related to sale of future royalties, net of imputed interest								(24,139	)		(17,992	)
Transaction costs for sale of future royalties		(265	)		—			—			(265	)
Net cash provided by financing activities		187,606			6,046
Net increase (decrease) in cash and cash equivalents and restricted cash		(110,039	)		23,706
Net cash provided by (used in) financing activities								(19,920	)		202,866
Net decrease in cash and cash equivalents and restricted cash								(226,665	)		(110,039	)
Cash and cash equivalents and restricted cash
Beginning of period		339,756			70,844			347,239			339,756
End of period	$	229,717		$	94,550		$	120,574		$	229,717
Supplemental disclosures of non-cash investing and financing activities
Net additions to property and equipment through accounts payable and accrued expenses	$	3,250		$	46
Non-cash additions to property and equipment through tenant improvement allowance	$	—		$	2,217
Non-cash consideration received for licenses granted	$	—		$	1,123
Proceeds due to Company from sales of non-marketable equity securities	$	646		$	—

	September 30, 2021		September 30, 2020
Cash and cash equivalents	$	228,387	$	93,220
Restricted cash		1,330		1,330
Total cash and cash equivalents and restricted cash	$	229,717	$	94,550


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021	3
	Consolidated Statements of Operations and Comprehensive ~~Income (Loss)~~Loss for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021	4
	Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2223
Item 3.	Quantitative and Qualitative Disclosures ~~About~~about Market Risk	3334
Item 4.	Controls and Procedures	3334

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3735
Item 3.	Defaults Upon Senior Securities	3735
Item 4.	Mine Safety Disclosures	3735
Item 5.	Other Information	3735
Item 6.	Exhibits	3836
Signatures		3937

	Three Months Ended September 30, 2021
							Accumulated									Three Months Ended September 30, 2022
					Additional		Other						Total									Accumulated
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’							Additional		Other						Total
	Shares		Amount		Capital		Loss			Deficit			Equity			Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
Balances at June 30, 2021		42,555	$	4	$	905,346	$	(1,255	)	$	(396,850	)	$	507,245
Exercise of stock options		163		—		1,729		—			—			1,729
																Shares		Amount		Capital		Loss			Deficit			Equity
Balances at June 30, 2022																	43,171	$	4	$	951,412	$	(14,763	)	$	(306,134	)	$	630,519
Vesting of restricted stock units, net of tax																	2		—		—		—			—			—
Exercise of stock options, net of tax																	66		—		917		—			—			917
Issuance of common stock under employee stock purchase plan		35		—		1,141		—			—			1,141			53		—		1,120		—			—			1,120
Stock-based compensation expense		—		—		9,734		—			—			9,734			—		—		10,245		—			—			10,245
Unrealized loss on available-for-sale securities, net		—		—		—		(30	)		—			(30	)		—		—		—		(3,493	)		—			(3,493	)
Net loss		—		—		—		—			(58,405	)		(58,405	)		—		—		—		—			(75,484	)		(75,484	)
Balances at September 30, 2021		42,752	$	4	$	917,950	$	(1,285	)	$	(455,255	)	$	461,414
Balances at September 30, 2022																	43,292	$	4	$	963,694	$	(18,256	)	$	(381,618	)	$	563,824

	Three Months Ended September 30, 2020
							Accumulated									Three Months Ended September 30, 2021
					Additional		Other						Total									Accumulated
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’							Additional		Other						Total
	Shares		Amount		Capital		Income			Deficit			Equity			Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
Balances at June 30, 2020		37,291	$	4	$	648,729	$	750		$	(251,622	)	$	397,861
																Shares		Amount		Capital		Loss			Deficit			Equity
Balances at June 30, 2021																	42,555	$	4	$	905,346	$	(1,255	)	$	(396,850	)	$	507,245
Exercise of stock options		74		—		268		—			—			268			163		—		1,729		—			—			1,729
Issuance of common stock under employee stock purchase plan		38		—		1,192		—			—			1,192			35		—		1,141		—			—			1,141
Stock-based compensation expense		—		—		8,035		—			—			8,035			—		—		9,734		—			—			9,734
Unrealized loss on available-for-sale securities, net		—		—		—		(487	)		—			(487	)		—		—		—		(30	)		—			(30	)
Net income		—		—		—		—			8,791			8,791
Balances at September 30, 2020		37,404	$	4	$	658,224	$	263		$	(242,831	)	$	415,660
Net loss																	—		—		—		—			(58,405	)		(58,405	)
Balances at September 30, 2021																	42,752	$	4	$	917,950	$	(1,285	)	$	(455,255	)	$	461,414

	Nine Months Ended September 30, 2021
							Accumulated									Nine Months Ended September 30, 2022
					Additional		Other						Total										Accumulated
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’							Additional			Other						Total
	Shares		Amount		Capital		Loss			Deficit			Equity			Common Stock				Paid-in			Comprehensive			Accumulated			Stockholders’
Balances at December 31, 2020		37,476	$	4	$	667,181	$	(360	)	$	(289,072	)	$	377,753
Issuance of common stock upon public offering, net of transaction costs of $14,194		4,899		—		216,059		—			—			216,059
Exercise of stock options		324		—		3,296		—			—			3,296
																Shares		Amount		Capital			Loss			Deficit			Equity
Balances at December 31, 2021																	42,831	$	4	$	928,095		$	(2,569	)	$	(161,232	)	$	764,298
Vesting of restricted stock units, net of tax																	57		—		(284	)		—			—			(284	)
Exercise of stock options, net of tax																	329		—		2,761			—			—			2,761
Issuance of common stock under employee stock purchase plan		54		—		1,768		—			—			1,768			75		—		1,742			—			—			1,742
Stock-based compensation expense		—		—		29,646		—			—			29,646			—		—		31,380			—			—			31,380
Unrealized loss on available-for-sale securities, net		—		—		—		(925	)		—			(925	)		—		—		—			(15,687	)		—			(15,687	)
Net loss		—		—		—		—			(166,183	)		(166,183	)		—		—		—			—			(220,386	)		(220,386	)
Balances at September 30, 2021		42,752	$	4	$	917,950	$	(1,285	)	$	(455,255	)	$	461,414
Balances at September 30, 2022																	43,292	$	4	$	963,694		$	(18,256	)	$	(381,618	)	$	563,824

	Nine Months Ended September 30, 2020
							Accumulated								Nine Months Ended September 30, 2021
					Additional		Other					Total									Accumulated
	Common Stock				Paid-in		Comprehensive		Accumulated			Stockholders’							Additional		Other						Total
	Shares		Amount		Capital		Income		Deficit			Equity			Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
Balances at December 31, 2019		36,992	$	4	$	627,810	$	205	$	(177,822	)	$	450,197
															Shares		Amount		Capital		Loss			Deficit			Equity
Balances at December 31, 2020																37,476	$	4	$	667,181	$	(360	)	$	(289,072	)	$	377,753
Issuance of common stock upon public offering, net of transaction costs of $14,194																4,899		—		216,059		—			—			216,059
Exercise of stock options		356		—		4,247		—		—			4,247			324		—		3,296		—			—			3,296
Issuance of common stock under employee stock purchase plan		55		—		1,799		—		—			1,799			54		—		1,768		—			—			1,768
Stock-based compensation expense		—		—		24,368		—		—			24,368			—		—		29,646		—			—			29,646
Unrealized gain on available-for-sale securities, net		—		—		—		58		—			58
Unrealized loss on available-for-sale securities, net																—		—		—		(925	)		—			(925	)
Net loss		—		—		—		—		(65,009	)		(65,009	)		—		—		—		—			(166,183	)		(166,183	)
Balances at September 30, 2020		37,404	$	4	$	658,224	$	263	$	(242,831	)	$	415,660
Balances at September 30, 2021																42,752	$	4	$	917,950	$	(1,285	)	$	(455,255	)	$	461,414