UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) | | | | | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2022March 31, 2023
OR | | | | | |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 000-30171
SANGAMO THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
________________________________________________ | | | | | | | | | | | | | | |
| Delaware | | | | 68-0359556 |
(State or other jurisdiction of
incorporation or organization) | | | | (I.R.S. Employer
Identification No.) |
| | | | | |
| 7000 Marina Blvd., Brisbane, California, 94005 |
| (Address of principal executive offices) (Zip Code) |
(510) 970-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | | | | | | | |
| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Common Stock, par value $0.01 per share | | SGMO | | Nasdaq Global Select Market |
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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
| Large accelerated filer | ☒ | | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | | Smaller reporting company | ☐ |
| | | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 31, 2022, 163,880,007May 4, 2023, 171,825,530 shares of the issuer’s common stock, par value $0.01 per share, were outstanding.
INDEX
SANGAMO THERAPEUTICS, INC. Unless otherwise indicated or the context suggests otherwise, references in this Quarterly Report on Form 10-Q, or Quarterly Report, to “Sangamo,” “the Company,” “we,” “us,” and “our” refer to Sangamo Therapeutics, Inc. and our subsidiaries, including Sangamo Therapeutics France S.A.S. and Sangamo Therapeutics UK Ltd.
Any third-party trade names, trademarks and service marks appearing in this Quarterly Report are the property of their respective holders.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some statements contained in this report are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements relate to our future events, including our anticipated operations, research, development, manufacturing and commercialization activities, clinical trials, operating results and financial condition. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements may include, but are not limited to, statements about:
•our strategy;
•anticipated research and development of product candidates and potential commercialization of any resulting approved products;
•the initiation, scope, rate of progress, enrollment, dosing, anticipated results and timing of our preclinical studies and clinical trials and those of our collaborators or strategic partners;
•the therapeutic and commercial potential of our product candidates, including the durability of therapeutic effects;
•the therapeutic and commercial potential of technologies used by us in our product candidates, including our gene therapy and cell therapy technologies, zinc finger, protein, or ZFP,ZF, technology platform, zinc finger nucleases, or ZFNs,ZF nucleases, and zinc finger protein transcription factors,transcriptional regulators, or ZFP-TFs;ZF-TRs, which include zinc finger repressors, or ZF-Rs, and zinc finger activators, or ZF-As;
•our ability to establish and maintain collaborations and strategic partnerships and realize the expected benefits of such arrangements, including our ability to find a potential new collaboration partner for the BIVV003 (formerly known as SAR445136) program;
•anticipated revenues from existing and new collaborations and the timing thereof;
•our estimates regarding the impact of the evolvingmacroeconomic environment, including the impacts of the COVID-19 pandemic, on our business and operations and the business and operations of our collaborators, including clinical trials and manufacturing, and our ability to manage such impacts;
•our research and development and other expenses;
•our ability to obtain adequate preclinical and clinical supplies of our product candidates from current and potential new suppliers and manufacturers or from our own in-house manufacturing facilities;
•the ability of Sangamo and our collaborators and strategic partners to obtain and maintain regulatory approvals for product candidates and the timing and costs associated with obtaining regulatory approvals;
•our ability to comply with, and the impact of, regulatory requirements, obligations and restrictions on our business and operations;
•our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others, including our ability to obtain and maintain rights to the technologies required to develop and commercialize our product candidates;
•competitive developments, including the impact on our competitive position of rival products and product candidates and our ability to meet competition from rival productssuch competition;
•our strategic pipeline prioritization, including plans for advancing our preclinical programs, and product candidates;related restructuring, including our plans to reduce our manufacturing and allogenic research footprints, and the expected charges and cost savings associated with such restructurings and any future cost reduction measures;
•our estimates regarding the sufficiency of our cash resources and our expenses, capital requirements and need for additional financing, and our ability to obtain additional financing;
•conditions and events that raise substantial doubt about our ability to continue as a going concern;
•our ability to manage the growth of our business;
•our projected operating and financial performance;
•our operational and legal risks; and
•our plans, objectives, expectations and intentions and any other statements that are not historical facts.
In some cases, you can identify forward-looking statements by use of future dates or by terms such as: “aim,” “anticipates,” “assume,” “believes,” “continues,” “could,” “estimates,” “expects,” “forecast,” “goal,” “guidance,” “intends,” “likely,” “may,” “objective,” “ongoing,” “plans,” “project,” “seeks,” “should,” “target,” “will,”“will” and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events, are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, without limitation:
•We are a clinical-stage biotechnology company with no approved products or product revenues. Our success depends substantially on clinical trial results demonstrating safety and efficacy of our product candidates to the satisfaction of regulatory authorities. Obtaining positive clinical trial results and regulatory approvals is expensive, lengthy, challenging and unpredictable and may never occur for any product candidates.
•Success in research and preclinical studies or early clinical trial results may not be indicative of results obtained in later trials. Likewise, preliminary, initial or interim data from clinical trials may be materially different from final data.
•Many of our product candidates are based on novel ZFPZF technologies that have yet to yield any approved commercially viable therapeutic products.
•We have historically incurred significant operating losses since inception and anticipate continued losses for the foreseeable future. We may never become profitable.
•We require significantwill need substantial additional funding to execute our operating plan and continue to operate as a going concern. We may be unable to raise additional capital to fund our operations and continue operating as a viable business. This additional capital may not be available to us on favorable terms, if at all, which would harm or at all.preclude our ability to develop our technology and product candidates and could delay or terminate some or all of our programs. Future sales and issuances of equity securities could also result in substantial dilution to our stockholders.
•We rely heavily on collaborations with larger biopharmaceutical companies to generate revenues and develop, obtain regulatory approvals for and commercialize many of our product candidates. If conflicts arise with our collaborators or if the collaborations terminate for any reason, our revenues and product development efforts would be negatively impacted.
•Biotechnology and genomic medicine are highly competitive businesses. Our competitors may develop rival technologies and products that are superior to or are commercialized more quickly than our technologies and product candidates.
•Manufacturing genomic medicines is complex, expensive, highly regulated and risky. We currently rely heavily on third‑third‑party manufacturers and have limited experience manufacturing products ourselves. Manufacturing challenges may result in unexpected costs, supply interruptions and harm and delay to our product development efforts.
•Even if we obtain regulatory approvals for our product candidates, our approved products may not gain market acceptance among physicians and patients and adequate coverage and reimbursement from third-party payors and may not demonstrate commercial viability.
•We may not be able to obtain, maintain and enforce necessary and desirable intellectual property protections for our technologies and product candidates in all desired jurisdictions, which could adversely affect the value of our technologies and our product development efforts and could increase the risks of costly, lengthy and distracting litigation with unpredictable results.
•Third parties, who may or may not be competitors, may allege that we are infringing, misappropriating, or otherwise practicing in an unauthorized manner their patents or other proprietary rights. Such allegations may result in infringement actions, other misappropriation actions or threats of such actions, all of which could increase the risks of costly, lengthy and distracting litigation with unpredictable results.
•Our success depends on hiring, integrating and retaining additional highly qualified skilled employees and retaining current key executives and employees, which may be challenging given that the competition for these individuals is intense and increases in employee attrition across the United States resulting from the “great resignation.”intense.
•The ongoing and evolving COVID-19 pandemic could continue to adversely impact our business and operations and the business and operations of our collaborators, manufacturers and other business partners. If such impacts become material, our revenues and product development efforts could be negatively impacted.
•The market price of our common stock has been and will likely continue to be volatile, and you could lose all or part of any investment in our common stock.
•We have recorded, and may be required to record in the future, significant charges if our intangible assets or long-lived assets become impaired.
•If we fail to meet continued listing standards of the Nasdaq Stock Market LLC, our common stock may be delisted. Delisting could adversely affect the liquidity of our common stock and the market price of our common stock could decrease, and our ability to obtain sufficient additional capital to fund our operations and to continue as a going concern would be substantially impaired.
•Our recent restructuring may not result in anticipated savings or operational efficiencies, could result in total costs and expenses that are greater than expected and could disrupt our business.
Additional discussion of the risks, uncertainties and other factors described above, as well as other risks and uncertainties material to our business, can be found under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 20212022 as filed with the Securities and Exchange Commission on February 24, 2022,23, 2023, as supplemented by the risks described under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q, and we encourage you to refer to that additional discussion. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our plans, objectives, estimates, expectations and intentions only as of the date of this filing. You should read this report completely and with the understanding that our actual future results and the timing of events may be materially different from what we expect, and we cannot otherwise guarantee that any forward-looking statement will be realized. We hereby qualify all of our forward-looking statements by these cautionary statements.
Except as required by law, we undertake no obligation to update or supplement any forward-looking statements publicly, or to update or supplement the reasons that actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. You are advised, however, to consult any further disclosures we make on related subjects.
This report includes discussion of certain clinical studies and trials relating to various product candidates. These studies typically are part of a larger body of clinical data relating to such product candidates, and the discussion herein should be considered in the context of the larger body of data. In addition, clinical data are subject to differing interpretations, and even if we view data as sufficient to support the safety and/or effectiveness of a product candidate, regulatory authorities may not share our views and may require additional data or may deny approval altogether.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SANGAMO THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands)
| | | September 30,
2022 | | December 31,
2021 | | March 31,
2023 | | December 31,
2022 |
| ASSETS | ASSETS | | | | ASSETS | | | |
| Current assets: | Current assets: | | Current assets: | |
| Cash and cash equivalents | Cash and cash equivalents | $ | 94,570 | | | $ | 178,872 | | Cash and cash equivalents | $ | 78,241 | | | $ | 100,444 | |
| Marketable securities | Marketable securities | 218,998 | | | 197,676 | | Marketable securities | 127,146 | | | 177,188 | |
| Interest receivable | Interest receivable | 524 | | | 349 | | Interest receivable | 1,023 | | | 794 | |
| Accounts receivable | Accounts receivable | 4,522 | | | 6,013 | | Accounts receivable | 7,026 | | | 3,678 | |
| Prepaid expenses and other current assets | Prepaid expenses and other current assets | 18,007 | | | 15,859 | | Prepaid expenses and other current assets | 13,651 | | | 18,223 | |
| Total current assets | Total current assets | 336,621 | | | 398,769 | | Total current assets | 227,087 | | | 300,327 | |
| Marketable securities, non-current | Marketable securities, non-current | 36,700 | | | 88,169 | | Marketable securities, non-current | 35,610 | | | 29,845 | |
| Property and equipment, net | Property and equipment, net | 55,986 | | | 51,523 | | Property and equipment, net | 59,877 | | | 63,531 | |
| Intangible assets | Intangible assets | 46,439 | | | 53,760 | | Intangible assets | 51,555 | | | 50,729 | |
| Goodwill | Goodwill | 34,511 | | | 39,702 | | Goodwill | — | | | 37,552 | |
| Operating lease right-of-use assets | Operating lease right-of-use assets | 64,956 | | | 73,181 | | Operating lease right-of-use assets | 48,696 | | | 62,002 | |
| Other non-current assets | Other non-current assets | 17,200 | | | 15,319 | | Other non-current assets | 16,242 | | | 17,023 | |
| Restricted cash | Restricted cash | 1,500 | | | 1,500 | | Restricted cash | 1,500 | | | 1,500 | |
| Total assets | Total assets | $ | 593,913 | | | $ | 721,923 | | Total assets | $ | 440,567 | | | $ | 562,509 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current liabilities: | Current liabilities: | | Current liabilities: | |
| Accounts payable | Accounts payable | $ | 17,380 | | | $ | 9,759 | | Accounts payable | $ | 19,920 | | | $ | 22,418 | |
| Accrued compensation and employee benefits | Accrued compensation and employee benefits | 19,045 | | | 20,840 | | Accrued compensation and employee benefits | 12,949 | | | 21,506 | |
| Other accrued liabilities | Other accrued liabilities | 14,046 | | | 11,577 | | Other accrued liabilities | 15,395 | | | 16,007 | |
| Deferred revenues | Deferred revenues | 71,890 | | | 85,711 | | Deferred revenues | 9,575 | | | 51,780 | |
| Total current liabilities | Total current liabilities | 122,361 | | | 127,887 | | Total current liabilities | 57,839 | | | 111,711 | |
| Deferred revenues, non-current | Deferred revenues, non-current | 115,641 | | | 166,776 | | Deferred revenues, non-current | 1,816 | | | 109,377 | |
| Long-term portion of lease liabilities | Long-term portion of lease liabilities | 39,705 | | | 44,055 | | Long-term portion of lease liabilities | 37,701 | | | 38,986 | |
| Deferred income tax | Deferred income tax | 5,740 | | | 6,645 | | Deferred income tax | 6,372 | | | 6,270 | |
| Other non-current liabilities | Other non-current liabilities | 1,312 | | | 1,217 | | Other non-current liabilities | 1,229 | | | 1,207 | |
| Total liabilities | Total liabilities | 284,759 | | | 346,580 | | Total liabilities | 104,957 | | | 267,551 | |
| Commitments and contingencies | Commitments and contingencies | | | | Commitments and contingencies | | | |
| Stockholders’ equity: | Stockholders’ equity: | | Stockholders’ equity: | |
| Preferred stock | Preferred stock | — | | | — | | Preferred stock | — | | | — | |
| Common stock | Common stock | 1,619 | | | 1,459 | | Common stock | 1,718 | | | 1,668 | |
| Additional paid-in capital | Additional paid-in capital | 1,423,105 | | | 1,334,138 | | Additional paid-in capital | 1,467,062 | | | 1,450,239 | |
| Accumulated deficit | Accumulated deficit | (1,096,572) | | | (956,267) | | Accumulated deficit | (1,127,412) | | | (1,148,545) | |
| Accumulated other comprehensive loss | Accumulated other comprehensive loss | (18,998) | | | (3,987) | | Accumulated other comprehensive loss | (5,758) | | | (8,404) | |
| Total stockholders’ equity | Total stockholders’ equity | 309,154 | | | 375,343 | | Total stockholders’ equity | 335,610 | | | 294,958 | |
| | Total liabilities and stockholders’ equity | Total liabilities and stockholders’ equity | $ | 593,913 | | | $ | 721,923 | | Total liabilities and stockholders’ equity | $ | 440,567 | | | $ | 562,509 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
SANGAMO THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts)
| | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | Three Months Ended
March 31, | |
| | 2022 | | 2021 | | 2022 | | 2021 | | 2023 | | 2022 | |
| Revenues | Revenues | $ | 26,460 | | | $ | 28,563 | | | $ | 84,069 | | | $ | 82,715 | | Revenues | $ | 157,957 | | | $ | 28,231 | | |
| Operating expenses: | Operating expenses: | | Operating expenses: | | |
| Research and development | Research and development | 65,116 | | | 62,498 | | | 183,719 | | | 179,018 | | Research and development | 63,216 | | | 58,584 | | |
| General and administrative | General and administrative | 16,238 | | | 14,501 | | | 46,239 | | | 47,135 | | General and administrative | 18,136 | | | 14,908 | | |
| Impairment of goodwill | | Impairment of goodwill | 38,138 | | | — | | |
| Impairment of long-lived assets | | Impairment of long-lived assets | 20,433 | | | — | | |
| Total operating expenses | Total operating expenses | 81,354 | | | 76,999 | | | 229,958 | | | 226,153 | | Total operating expenses | 139,923 | | | 73,492 | | |
| Loss from operations | (54,894) | | | (48,436) | | | (145,889) | | | (143,438) | | |
| Income (loss) from operations | | Income (loss) from operations | 18,034 | | | (45,261) | | |
| Interest and other income, net | Interest and other income, net | 1,769 | | | 834 | | | 5,754 | | | 3,010 | | Interest and other income, net | 3,293 | | | 1,342 | | |
| Loss before income taxes | (53,125) | | | (47,602) | | | (140,135) | | | (140,428) | | |
| Income (loss) before income taxes | | Income (loss) before income taxes | 21,327 | | | (43,919) | | |
| Income tax expense | Income tax expense | 30 | | | 86 | | | 170 | | | 373 | | Income tax expense | 194 | | | 58 | | |
| Net loss | (53,155) | | | (47,688) | | | (140,305) | | | (140,801) | | |
| Net loss attributable to non-controlling interest | — | | | — | | | — | | | (11) | | |
| Net loss attributable to Sangamo Therapeutics, Inc. stockholders | $ | (53,155) | | | $ | (47,688) | | | $ | (140,305) | | | $ | (140,790) | | |
| Basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders | $ | (0.34) | | | $ | (0.33) | | | $ | (0.93) | | | $ | (0.98) | | |
| Shares used in computing basic and diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders | 158,042 | | | 145,399 | | | 150,850 | | | 144,173 | | |
| | Net income (loss) | | Net income (loss) | $ | 21,133 | | | $ | (43,977) | | |
| Net income (loss) per share | | Net income (loss) per share | | | | |
| Basic | | Basic | $ | 0.13 | | | $ | (0.30) | | |
| Diluted | | Diluted | $ | 0.12 | | | $ | (0.30) | | |
| Shares used in computing net income (loss) per share | | Shares used in computing net income (loss) per share | | |
| Basic | | Basic | 168,533 | | | 146,218 | | |
| Diluted | | Diluted | 169,181 | | | 146,218 | | |
See accompanying Notes to Condensed Consolidated Financial Statements.
SANGAMO THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSINCOME (LOSS)
(Unaudited; in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Net loss | $ | (53,155) | | | $ | (47,688) | | | $ | (140,305) | | | $ | (140,801) | |
| Foreign currency translation adjustment | (6,028) | | | (2,565) | | | (14,040) | | | (6,006) | |
| Net pension gains | 55 | | | — | | | 130 | | | — | |
| Unrealized gain (loss) on marketable securities, net of tax | 135 | | | (45) | | | (1,101) | | | (36) | |
| | | | | | | |
| Comprehensive loss | (58,993) | | | (50,298) | | | (155,316) | | | (146,843) | |
| Comprehensive loss attributable to non-controlling interest | — | | | — | | | — | | | (11) | |
| Comprehensive loss attributable to Sangamo Therapeutics, Inc. | $ | (58,993) | | | $ | (50,298) | | | $ | (155,316) | | | $ | (146,832) | |
| | | | | | | | | | | | | | | |
| Three Months Ended
March 31, | | |
| 2023 | | 2022 | | | | |
| Net income (loss) | $ | 21,133 | | | $ | (43,977) | | | | | |
| Foreign currency translation adjustment | 2,045 | | | (1,904) | | | | | |
| Net pension (loss) gain | (3) | | | 19 | | | | | |
| Unrealized gain (loss) on marketable securities, net of tax | 604 | | | (1,083) | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Comprehensive income (loss) | $ | 23,779 | | | $ | (46,945) | | | | | |
See accompanying Notes to Condensed Consolidated Financial Statements.
SANGAMO THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited; in thousands, except share amounts)
| | | Three Months Ended September 30, 2022 | | | Three Months Ended March 31, 2023 | |
| | Common Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated
Other
Comprehensive
(Loss) Income | | Total Stockholders’ Equity | | | Common Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated
Other
Comprehensive
Income (Loss) | | Total Stockholders’ Equity | |
| Shares | | Amount | | Shares | | Amount | |
| Balances at June 30, 2022 | 153,352,502 | | | $ | 1,534 | | | $ | 1,373,324 | | | $ | (1,043,417) | | | $ | (13,160) | | | $ | 318,281 | | | |
| Balances at December 31, 2022 | | Balances at December 31, 2022 | 166,793,320 | | | $ | 1,668 | | | $ | 1,450,239 | | | $ | (1,148,545) | | | $ | (8,404) | | | $ | 294,958 | | |
| Issuance of common stock in connection with at-the-market offering, net of offering expenses | Issuance of common stock in connection with at-the-market offering, net of offering expenses | 8,483,104 | | | 85 | | | 42,089 | | | — | | | — | | | 42,174 | | | Issuance of common stock in connection with at-the-market offering, net of offering expenses | 3,962,430 | | | 40 | | | 9,665 | | | — | | | — | | | 9,705 | | |
| Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax | Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax | 82,617 | | | — | | | (101) | | | — | | | — | | | (101) | | | Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax | 1,015,818 | | | 10 | | | (1,119) | | | — | | | — | | | (1,109) | | |
| | Stock-based compensation | Stock-based compensation | — | | | — | | | 7,793 | | | — | | | — | | | 7,793 | | | Stock-based compensation | — | | | — | | | 8,277 | | | — | | | — | | | 8,277 | | |
| | Foreign currency translation adjustment | Foreign currency translation adjustment | — | | | — | | | — | | | — | | | (6,028) | | | (6,028) | | | Foreign currency translation adjustment | — | | | — | | | — | | | — | | | 2,045 | | | 2,045 | | |
| Net pension gains | — | | | — | | | — | | | — | | | 55 | | | 55 | | | |
| Net pension loss | | Net pension loss | — | | | — | | | — | | | — | | | (3) | | | (3) | | |
| Net unrealized gain on marketable securities, net of tax | Net unrealized gain on marketable securities, net of tax | — | | | — | | | — | | | — | | | 135 | | | 135 | | | Net unrealized gain on marketable securities, net of tax | — | | | — | | | — | | | — | | | 604 | | | 604 | | |
| | Net loss | — | | | — | | | — | | | (53,155) | | | — | | | (53,155) | | | |
| Balances at September 30, 2022 | 161,918,223 | | | $ | 1,619 | | | $ | 1,423,105 | | | $ | (1,096,572) | | | $ | (18,998) | | | $ | 309,154 | | | |
| Net income | | Net income | — | | | — | | | — | | | 21,133 | | | — | | | 21,133 | | |
| Balances at March 31, 2023 | | Balances at March 31, 2023 | 171,771,568 | | | $ | 1,718 | | | $ | 1,467,062 | | | $ | (1,127,412) | | | $ | (5,758) | | | $ | 335,610 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2022 |
| Common Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated
Other
Comprehensive
(Loss) Income | | | | Total Stockholders’ Equity |
| Shares | | Amount |
| Balances at December 31, 2021 | 145,921,530 | | | $ | 1,459 | | | $ | 1,334,138 | | | $ | (956,267) | | | $ | (3,987) | | | | | $ | 375,343 | |
| | | | | | | | | | | | | |
| Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax | 743,230 | | | 8 | | | (1,575) | | | — | | | — | | | | | (1,567) | |
| | | | | | | | | | | | | |
| Stock-based compensation | — | | | — | | | 7,691 | | | — | | | — | | | | | 7,691 | |
| | | | | | | | | | | | | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | (1,904) | | | | | (1,904) | |
| Net pension gains | | | | | | | | | 19 | | | | | 19 | |
| Net unrealized loss on marketable securities, net of tax | — | | | — | | | — | | | — | | | (1,083) | | | | | (1,083) | |
| | | | | | | | | | | | | |
| Net loss | — | | | — | | | — | | | (43,977) | | | — | | | | | (43,977) | |
| Balances at March 31, 2022 | 146,664,760 | | | $ | 1,467 | | | $ | 1,340,254 | | | $ | (1,000,244) | | | $ | (6,955) | | | | | $ | 334,522 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2022 |
| Common Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated
Other
Comprehensive
(Loss) Income | | Total Stockholders’ Equity |
| Shares | | Amount |
| Balances at December 31, 2021 | 145,921,530 | | | $ | 1,459 | | | $ | 1,334,138 | | | $ | (956,267) | | | $ | (3,987) | | | $ | 375,343 | |
| Issuance of common stock in connection with at-the-market offering, net of offering expenses | 14,711,770 | | | 147 | | | 66,301 | | | — | | | — | | | 66,448 | |
| Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax | 925,455 | | | 9 | | | (1,847) | | | — | | | — | | | (1,838) | |
| Issuance of common stock under employee stock purchase plan | 359,468 | | | 4 | | | 1,111 | | | — | | | — | | | 1,115 | |
| Stock-based compensation | — | | | — | | | 23,402 | | | — | | | — | | | 23,402 | |
| | | | | | | | | | | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | (14,040) | | | (14,040) | |
| Net pension gains | — | | | — | | | — | | | — | | | 130 | | | 130 | |
| Net unrealized loss on marketable securities, net of tax | — | | | — | | | — | | | — | | | (1,101) | | | (1,101) | |
| | | | | | | | | | | |
| Net loss | — | | | — | | | — | | | (140,305) | | | — | | | (140,305) | |
| Balances at September 30, 2022 | 161,918,223 | | | $ | 1,619 | | | $ | 1,423,105 | | | $ | (1,096,572) | | | $ | (18,998) | | | $ | 309,154 | |
SANGAMO THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited; in thousands, except share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2021 |
| Common Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated
Other
Comprehensive
Income (Loss) | | Non-
Controlling
Interest | | Total Stockholders’ Equity |
| Shares | | Amount |
| Balances at June 30, 2021 | 145,106,901 | | | $ | 1,451 | | | $ | 1,313,102 | | | $ | (871,083) | | | $ | 1,987 | | | $ | — | | | $ | 445,457 | |
| Issuance of common stock in connection with at-the-market offering, net of offering expenses | 202,705 | | | 2 | | | 2,365 | | | — | | | — | | | — | | | 2,367 | |
| Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax | 206,970 | | | 2 | | | 615 | | | — | | | — | | | — | | | 617 | |
| Issuance of common stock under employee stock purchase plan | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Stock-based compensation | — | | | — | | | 7,873 | | | — | | | — | | | — | | | 7,873 | |
| | | | | | | | | | | | | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | (2,565) | | | — | | | (2,565) | |
| Net unrealized loss on marketable securities, net of tax | — | | | — | | | — | | | — | | | (45) | | | — | | | (45) | |
| | | | | | | | | | | | | |
| Net loss | — | | | — | | | — | | | (47,688) | | | — | | | — | | | (47,688) | |
| Balances at September 30, 2021 | 145,516,576 | | | $ | 1,455 | | | $ | 1,323,955 | | | $ | (918,771) | | | $ | (623) | | | $ | — | | | $ | 406,016 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2021 |
| Common Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated
Other
Comprehensive
Income (Loss) | | Non-
Controlling
Interest | | Total Stockholders’ Equity |
| Shares | | Amount |
| Balances at December 31, 2020 | 142,063,203 | | | $ | 1,421 | | | $ | 1,269,375 | | | $ | (777,981) | | | $ | 5,419 | | | $ | (868) | | | $ | 497,366 | |
| Issuance of common stock in connection with at-the-market offering, net of offering expenses | 2,007,932 | | | 20 | | | 27,079 | | | — | | | — | | | — | | | 27,099 | |
| Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax | 1,200,871 | | | 12 | | | 1,582 | | | — | | | — | | | — | | | 1,594 | |
| Issuance of common stock under employee stock purchase plan | 244,570 | | | 2 | | | 2,052 | | | — | | | — | | | — | | | 2,054 | |
| Stock-based compensation | — | | | — | | | 24,880 | | | — | | | — | | | — | | | 24,880 | |
| Acquisition of additional shares of Sangamo France | — | | | — | | | (70) | | | — | | | — | | | (64) | | | (134) | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | (6,006) | | | — | | | (6,006) | |
| | | | | | | | | | | | | |
| Net unrealized loss on marketable securities, net of tax | — | | | — | | | — | | | — | | | (36) | | | — | | | (36) | |
| Buy-out of non-controlling interest | | | | | (943) | | | | | | | 943 | | | — | |
| Net loss | — | | | — | | | — | | | (140,790) | | | — | | | (11) | | | (140,801) | |
| Balances at September 30, 2021 | 145,516,576 | | | $ | 1,455 | | | $ | 1,323,955 | | | $ | (918,771) | | | $ | (623) | | | $ | — | | | $ | 406,016 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
SANGAMO THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
| | | Nine Months Ended
September 30, | | Three Months Ended
March 31, |
| | 2022 | | 2021 | | 2023 | | 2022 |
| Operating Activities: | Operating Activities: | | | | Operating Activities: | | | |
| Net loss | $ | (140,305) | | | $ | (140,801) | | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | |
| Net income (loss) | | Net income (loss) | $ | 21,133 | | | $ | (43,977) | |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | | Adjustments to reconcile net income (loss) to net cash used in operating activities: | |
| Impairment of goodwill | | Impairment of goodwill | 38,138 | | | — | |
| Impairment of long-lived assets | | Impairment of long-lived assets | 20,433 | | | — | |
| Depreciation and amortization | Depreciation and amortization | 8,765 | | | 6,675 | | Depreciation and amortization | 3,489 | | | 2,832 | |
| Amortization of (discount) premium on marketable securities | (324) | | | 2,394 | | |
| (Accretion of discounts) amortization of premium on marketable securities | | (Accretion of discounts) amortization of premium on marketable securities | (1,048) | | | 164 | |
| Amortization and other changes in operating lease right-of-use assets | Amortization and other changes in operating lease right-of-use assets | 6,357 | | | 6,104 | | Amortization and other changes in operating lease right-of-use assets | 2,092 | | | 2,106 | |
| Gain on free shares | — | | | (18) | | |
| | Stock-based compensation | Stock-based compensation | 23,402 | | | 24,880 | | Stock-based compensation | 8,277 | | | 7,691 | |
| Gain on disposal of property and equipment | — | | | (30) | | |
| | Net changes in operating assets and liabilities: | Net changes in operating assets and liabilities: | | Net changes in operating assets and liabilities: | |
| Interest receivable | Interest receivable | (175) | | | 415 | | Interest receivable | (229) | | | (7) | |
| Accounts receivable | Accounts receivable | 1,491 | | | (2,743) | | Accounts receivable | (3,348) | | | (925) | |
| Prepaid expenses and other assets | Prepaid expenses and other assets | (5,848) | | | (6,467) | | Prepaid expenses and other assets | 6,223 | | | (241) | |
| Accounts payable and other accrued liabilities | Accounts payable and other accrued liabilities | 9,443 | | | (4,699) | | Accounts payable and other accrued liabilities | (1,905) | | | 3,609 | |
| | Accrued compensation and employee benefits | Accrued compensation and employee benefits | (1,225) | | | (1,932) | | Accrued compensation and employee benefits | (8,599) | | | (8,270) | |
| | Deferred revenues | Deferred revenues | (64,956) | | | (62,292) | | Deferred revenues | (149,766) | | | (21,004) | |
| Lease liabilities | Lease liabilities | (3,298) | | | (3,227) | | Lease liabilities | (1,212) | | | (972) | |
| Other non-current liabilities | Other non-current liabilities | 95 | | | 1,204 | | Other non-current liabilities | 22 | | | 19 | |
| Net cash used in operating activities | Net cash used in operating activities | (166,578) | | | (180,537) | | Net cash used in operating activities | (66,300) | | | (58,975) | |
| Investing Activities: | Investing Activities: | | | | Investing Activities: | | | |
| Purchases of marketable securities | Purchases of marketable securities | (225,621) | | | (300,387) | | Purchases of marketable securities | (36,225) | | | (65,756) | |
| Maturities of marketable securities | Maturities of marketable securities | 254,990 | | | 509,620 | | Maturities of marketable securities | 82,153 | | | 70,300 | |
| Sales of marketable securities | — | | | 6,870 | | |
| | Purchases of property and equipment | Purchases of property and equipment | (12,697) | | | (20,420) | | Purchases of property and equipment | (10,200) | | | (2,839) | |
| Purchase of additional Sangamo France shares | — | | | (119) | | |
| | | Net cash provided by investing activities | Net cash provided by investing activities | 16,672 | | | 195,564 | | Net cash provided by investing activities | 35,728 | | | 1,705 | |
| Financing Activities: | Financing Activities: | | | | Financing Activities: | | | |
| Proceeds from at-the-market offering, net of offering expenses | Proceeds from at-the-market offering, net of offering expenses | 65,848 | | | 27,099 | | Proceeds from at-the-market offering, net of offering expenses | 9,111 | | | — | |
| | Taxes paid related to net share settlement of equity awards | Taxes paid related to net share settlement of equity awards | (1,962) | | | (2,988) | | Taxes paid related to net share settlement of equity awards | (1,109) | | | (1,641) | |
| Proceeds from exercise of stock options | Proceeds from exercise of stock options | 124 | | | 4,582 | | Proceeds from exercise of stock options | — | | | 74 | |
| Proceeds from issuance of common stock under employee stock purchase plan | 1,115 | | | 2,053 | | |
| Net cash provided by financing activities | 65,125 | | | 30,746 | | |
| | Net cash provided by (used in) financing activities | | Net cash provided by (used in) financing activities | 8,002 | | | (1,567) | |
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 479 | | | (148) | | Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 367 | | | 222 | |
| Net (decrease) increase in cash, cash equivalents, and restricted cash | (84,302) | | | 45,625 | | |
| Net decrease in cash, cash equivalents, and restricted cash | | Net decrease in cash, cash equivalents, and restricted cash | (22,203) | | | (58,615) | |
| Cash, cash equivalents, and restricted cash, beginning of period | Cash, cash equivalents, and restricted cash, beginning of period | 180,372 | | | 132,829 | | Cash, cash equivalents, and restricted cash, beginning of period | 101,944 | | | 180,372 | |
| Cash, cash equivalents, and restricted cash, end of period | Cash, cash equivalents, and restricted cash, end of period | $ | 96,070 | | | $ | 178,454 | | Cash, cash equivalents, and restricted cash, end of period | $ | 79,741 | | | $ | 121,757 | |
| Supplemental cash flow disclosures: | Supplemental cash flow disclosures: | | | | Supplemental cash flow disclosures: | | | |
| Property and equipment included in unpaid liabilities | Property and equipment included in unpaid liabilities | $ | 3,927 | | | $ | 650 | | Property and equipment included in unpaid liabilities | $ | 5,184 | | | $ | 2,257 | |
| Right-of-use assets obtained in exchange for lease obligations | $ | — | | | $ | 1,349 | | |
| | Tenant improvement allowance included in contra-lease liability | Tenant improvement allowance included in contra-lease liability | $ | 1,531 | | | $ | — | | Tenant improvement allowance included in contra-lease liability | $ | 243 | | | $ | — | |
| Buy-out of non-controlling interest | $ | — | | | $ | 943 | | |
|
See accompanying Notes to Condensed Consolidated Financial Statements.
SANGAMO THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1—ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of Business
Sangamo Therapeutics, Inc. (“Sangamo” or “the Company”) was incorporated in the State of Delaware in June 1995 and changed its name from Sangamo Biosciences, Inc. in January 2017. Sangamo is a clinical-stage genomic medicine company committed to translating ground-breaking science into medicines that transform the lives of patients with serious diseases.
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of these financial statements for the periods presented have been included. Operating results for the three and nine months ended September 30, 2022March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.2023. The Condensed Consolidated Balance Sheet data at December 31, 20212022 was derived from the audited Consolidated Financial Statements included in Sangamo’s Annual Report on Form 10-K for the year ended December 31, 20212022 (the “2021“2022 Annual Report”) as filed with the SEC on February 24, 2022.23, 2023.
The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in the Condensed Consolidated Financial Statements. For consolidated entities where the Company owns or is exposed to less than 100% of the economics, the Company records net loss attributable to non-controlling interests on its Condensed Consolidated Statements of Operations equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties.
The accompanying Condensed Consolidated Financial Statements and related financial information should be read together with the audited Consolidated Financial Statements and footnotes for the year ended December 31, 2021,2022, included in the 20212022 Annual Report.
Liquidity, Capital Resources and Management’s PlanPlans
Sangamo is currently working on a number of long-term development projects that involve experimental technologies. The projects may require several years and substantial expenditures to complete and ultimately may be unsuccessful. The Company plans to financeIn recent years, the Company’s operations with available cash resources,have been funded primarily through collaborations and strategic partnerships, funds, research grants and from the issuance of equity or debt securities. SangamoAs of March 31, 2023, the Company had capital resources of $241.0 million consisting of cash, cash equivalents, and marketable securities. Management believes that its availablethe Company’s existing cash, cash equivalents, and marketable securities as of September 30, 2022, and expected future milestones and research services revenue from collaborations, strategic partnerships and research grants,in combination with other planned cost reduction initiatives will be adequatesufficient to fund its currently planned operations throughfor at least the next 12 months from the date these Condensed Consolidated Financial Statements are issued. Sangamo
Under Accounting Standard Codification (“ASC”) Topic 205-40, Presentation of Financial Statements—Going Concern (“ASC Topic 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the Condensed Consolidated Financial Statements are issued. As required under ASC Topic 205-40, management’s evaluation should initially not take into consideration the potential mitigating effects of management’s plans that have not been fully implemented as of the date the Condensed Consolidated Financial Statements are issued.
Substantial Doubt Raised
In performing the first step of the evaluation, the Company concluded that the following conditions raised substantial doubt about its ability to continue as a going concern:
•Although the Company reported net income of $21.1 million for the three months ended March 31, 2023 primarily due to the termination of a collaboration agreement, the Company has a history of recurring net losses, including $192.3 million and $178.3 million for the years ended December 31, 2022 and 2021, respectively; and
•The Company had an accumulated deficit of $1,127.4 million and $1,148.5 million as of March 31, 2023 and December 31, 2022, respectively.
Consideration of Management’s Plans
In performing the second step of this assessment, the Company is required to evaluate whether it is probable that its plans will requirebe effectively implemented within one year after the Condensed Consolidated Financial Statements are issued and whether it is probable those plans will alleviate the substantial doubt about its ability to continue as a going concern.
The Company has identified several actions, including cost reduction measures that already have been initiated or that would be initiated in a timely manner, to address the Company’s liquidity needs over the twelve-month period from the date the Condensed Consolidated Financial Statements are issued, as follows:
•Deferral and reprioritization of certain research and development programs that would involve reduced program and headcount spend;
•Reduction in force that would be intended to extend the cash runway necessary to fund operations;
•Pause on any new hiring and reduction in ancillary expenses such as travel and recruitment expenses; and
•Reduction in non-critical capital and operating expenditures including additional equipment, lab improvements, efficiency projects, and business support spend.
Management Assessment of Ability to Continue as a Going Concern
The Company believes management’s plans, as described more fully above, will provide sufficient liquidity to meet its financial obligations and maintain levels of liquidity over the twelve-month period from the date the Condensed Consolidated Financial Statements are issued. Therefore, management has concluded these plans alleviate the substantial doubt that was raised about the Company’s ability to continue as a going concern for at least twelve months from the date that the Condensed Consolidated Financial Statements are issued. Determining the extent to which conditions or events raise substantial doubt about the Company’s ability to continue as a going concern and the extent to which mitigating plans sufficiently alleviate any such substantial doubt requires significant judgment and estimation by the Company. The Company makes assumptions that management’s plans will be effectively implemented and alleviate substantial doubt and its ability to continue as a going concern. The Company believes that the estimated values used in its going concern analysis are based on reasonable assumptions. However, such assumptions are inherently uncertain and actual results could differ materially from those estimates.
The accompanying Condensed Consolidated Financial Statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Condensed Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.
Future Plans and Considerations
The Company will be required to raise substantial additional financial resourcescapital to completefund its operations and support its research and development endeavors. In this regard, the development and commercialization of its product candidates. AdditionalCompany is actively seeking substantial additional capital, including through public or private equity or debt financings, royalty financings or other sources, such as strategic collaborations. However, additional capital may not be available on terms acceptable to the Company, ifon terms that are acceptable or at all. If adequate funds are not available to the Company on a timely basis, or ifat all, the Company will be required to take additional actions to address its liquidity needs, including additional cost reduction measures such as further reducing operating expenses and delaying, reducing the scope of, discontinuing or altering its research and development activities, which could have a material adverse effect on the Company’s business. If the Company raises additional capital through public or private equity offerings, including sales pursuant to the Company’s at-the-market offering program with Jefferies LLC, the ownership interest of its existing stockholders will be diluted, and such dilution may be substantial, and the terms of potential funding sources are unfavorable, the Company’s business and ability to develop its technology and therapeutic products would be harmed. Furthermore, any sales of additionalnew equity securities may result in dilutionhave a preference over, and include rights superior to, the Company’s stockholders, and anycommon stock. If the Company raises additional capital through royalty financings or other collaborations, strategic alliances or licensing arrangements with third parties, it may need to relinquish certain valuable rights to its product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable. If the Company raises additional capital through debt financing, the Company may includebe subject to specified financial covenants thator covenants limiting or restricting its ability to take specific actions, such as incurring additional debt, making capital expenditures or pursuing certain transactions, any of which could restrict the Company’s ability to commercialize its product candidates or operate as a business. In addition, management’s cost reduction plans are intended to reduce the Company’s operating expenses and optimize its cash resources. Based on the timing of these cost reduction plans, the Company expects to start realizing the benefit of its efforts beginning in the second quarter of 2023; however, there can be no assurance that the Company will realize the benefits of the cost reduction plans on the anticipated timeline, or at all.
Summary of Significant Accounting Policies
Use of Estimates
The preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and the accompanying notes. On an ongoing basis, management evaluates its estimates including critical accounting policies or estimates related to revenue recognition, clinical trial accruals, income taxes, fair value of assets and liabilities, including from acquisitions, useful lives and impairment of long-lived assets, and stock-based compensation. Estimates are based on historical experience and on various other market specific and other relevant assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
In September 2021,March 2023, the Company recorded an adjustment to revenue related to a change in estimate in connection with the collaboration agreement with Sanofi S.A. (“Sanofi”)Kite Pharma, Inc. This adjustment was driven by a reduction in the estimated future level of the Company’s research and development services and as a result, future project costs. This resulted in an increase in proportional cumulative performance on this collaboration and an increase in revenue of $8.9 million, an increase in net income of $8.9 million, and an increase in the project costs for its beta thalassemia program and the increase in project scope and the corresponding costs for its sickle cell disease program, both of which resulted in a decrease in the measure of proportional cumulative performance.
This adjustment decreased revenue by $2.5 million, increased net loss by $2.5 million and increased the Company'sCompany’s basic and diluted net lossearnings per share by $0.02of $0.06 and $0.05, respectively, for the three and nine months ended September 30, 2021.March 31, 2023.
Revenue Recognition
The Company accounts for its revenues pursuant to the provisions of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). The Company’s contract revenues are derived from collaboration agreements including licensing arrangements and research activity grants.services. Research and licensing agreements typically include nonrefundable upfront signing or license fees, payments at negotiated rates for time incurred by Company researchers, third-party cost reimbursements, for research services, minimumadditional target selection fees, sublicense fees, milestone payments tied to ongoing development and product commercialization, and royalties on future licensees’ product sales. The Company has agreements with both fixed and variable consideration.All funds received from the Company’s collaboration partners are generally not refundable. Non-refundable upfront fees and funding of research and development activities are considered fixed while milestone payments are generally identified as variable consideration. Sangamo’s research grants are typically multi-year agreements and provide forat the reimbursement of qualified expenses for research and development as defined under the termscommencement of the grant agreement. Revenues under research grant agreements are generally recognized whencontract. All other fees represent variable consideration in contracts. One of the related qualified research expenses are incurred.Company’s contracts also contains a provision where the Company reimburses its customer for certain costs they incur which is accounted for as a reduction to the contract transaction price as the Company does not acquire any distinct goods or services in exchange for such payments. Deferred revenue primarily represents the portion of researchnonrefundable upfront fees or licensemilestone payments received but not earned.
In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
A performance obligation is a promise in a contract to transfer a distinct good or service toMost of the customer and is the unit of account in ASC Topic 606. The Company’s performance obligations include license rights,in its collaboration agreements represent distinct bundles of licenses of intellectual property and research and development services, with these components being individually non-distinct. Options to license the Company’s intellectual property and/or acquire research and development services associated with regulatory submission and approval processes. also represent performance obligations when they grant customers a material right, e.g., a right to a discount the customer would not have received if they did not purchase the Company’s services under the existing contract.
Revenues from bundles of licenses of intellectual property and research and development services earned under collaboration agreements are generally recognized as revenue as the related services are provided. Revenues from non-refundable upfront fees are recognized over time eitherusing a proportional performance method. Under this method, revenue is recognized by measuring progress towards satisfaction of the relevant performance obligation using a measure that best depicts the progress towards satisfaction of the relevant performance obligation. For most of the Company’s agreements the measure of progress is an input method (i.e., cumulative actual costs incurred relative to total estimated costs) ormeasure based on a straight-line basis when alevel of effort incurred, which includes the value of actual time by Company researchers plus third-party cost reimbursements.
Consideration allocated to options that include material rights is deferred until the options are exercised or expire. The exercise of such options is accounted for as contract continuation, with target selection fees and estimated variable consideration included in the transaction price at that time and allocated specifically to the respective target’s performance obligation is expected to be satisfied evenly over a period of time (or when the entity has a stand-ready obligation). obligation.
Significant management judgment is required to determine the level of effort required under an arrangement, and the period over which the Company expects to complete its performance obligations under the arrangement, which may include total internal personnel costs and external costs to be incurred as well as, in certain cases, the estimated stand-ready obligation period.arrangement. Changes in these estimates can have a material effect on revenue recognized. If the Company cannot reasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. The Company includes the unconstrained amount of estimatedFor variable consideration, in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each
subsequent reporting period, the Company re-evaluates the estimated variable consideration included in the transaction price and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. RevenueA cumulative catch-up is then recognized overrecorded in the remaining estimatedcurrent period to reflect the updated transaction price and the updated measure of performance using the cumulative catch-up method.progress. The estimated period of performance and projectlevel of effort, including the value of Company researchers’ time and third-party costs, such as personnel and manufacturing cost, are reviewed quarterly and adjusted, as needed, to reflect the Company’s current assumptions regarding the timing of its deliverables.expectations.
As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price of each performance obligation identified in the contract. The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of exercise of technical and regulatory success. Related costssuccess, and expenses underthe expected level of effort for research and development services.
Contract modifications occur when the price and/or scope of an arrangement changes. If the modification consists of adding new distinct goods or services in exchange for consideration that reflects standalone selling prices of these arrangements have historically approximatedgoods and services, the revenues recognized.
the modification are accounted for in a manner similar to the effect of a change in the estimated measure of progress, with cumulative catch-up in revenue recorded at the time of the modification. If some of the remaining goods and services are distinct from those previously provided and others are not, to account for the effects of the modification the Company applies principles consistent with the objectives of the modification accounting. Revenues from major collaboration agreements and research activity grants as a percentage of total revenues were as follows:
| | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | Three Months Ended
March 31, | |
| | 2022 | | 2021 | | 2022 | | 2021 | | 2023 | | 2022 | |
| Novartis Institutes for BioMedical Research, Inc. | 36 | % | | 40 | % | | 35 | % | | 35 | % | |
| Biogen MA, Inc. | Biogen MA, Inc. | 36 | % | | 38 | % | | 36 | % | | 39 | % | Biogen MA, Inc. | 84 | % | | 40 | % | |
| Kite Pharma, Inc. | Kite Pharma, Inc. | 26 | % | | 22 | % | | 23 | % | | 23 | % | Kite Pharma, Inc. | 8 | % | | 22 | % | |
| Novartis Institutes for BioMedical Research, Inc. | | Novartis Institutes for BioMedical Research, Inc. | 6 | % | | 32 | % | |
| Sanofi S.A. | Sanofi S.A. | — | % | | (3) | % | | 4 | % | | 2 | % | Sanofi S.A. | — | % | | 5 | % | |
|
Funds received fromImpairment of Goodwill, Intangible Assets and Long-lived Assets
Goodwill represents the Company’s collaboration partnersexcess of consideration transferred over the fair values of assets acquired and liabilities assumed in a business combination. Intangible assets with indefinite useful lives are generally not refundablerelated to purchased in-process research and development (“IPR&D”) projects and are recordedmeasured at their respective fair values as revenue asof the acquisition date. Goodwill and intangible assets with indefinite useful lives are not amortized. Intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. If and when development is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time.
Goodwill and indefinite-lived intangible assets are assessed for impairment on an annual basis and whenever events and circumstances indicate that these assets may be impaired. The Company fulfills its performance obligations,evaluates the fair value of long-lived assets, which are satisfied over time (i.e., stand ready obligations)include property and equipment, leasehold improvements and right-of-use assets, for impairment whenever events or by usingchanges in circumstances indicate that the input method (i.e., cumulative actual costs incurred relative to total estimated costs). Revenue is also recognized whencarrying amounts of the asset may not be fully recoverable.
In testing for goodwill impairment, the Company has incurred qualified research and development coststhe option of first performing a qualitative assessment to determine whether it is more likely than not that are reimbursable from its collaboration partners and when there is reasonable assurance that such costs will be reimbursed. Any payments received from a collaboration partner in advancethe fair value of the completionreporting unit is less than its carrying amount. If the Company elects to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that the carrying value exceeds its fair value, the Company performs a quantitative goodwill impairment test to compare the fair value of its reporting unit to its carrying value, including goodwill. If the carrying value, including goodwill, exceeds the reporting unit’s fair value, the Company will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value (but not in excess of the relevantcarrying value of goodwill).
Prior to testing goodwill for impairment, the Company also tests impairment for its other indefinite-lived and long-lived assets. The long-lived asset evaluation is performed at the asset group level, i.e., the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a
comparison of the carrying amounts of an asset group to the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition. If such a review indicates that the carrying amount of the asset group is not recoverable, an impairment loss shall be measured as the amount by which the carrying amount of an asset group exceeds its fair value. Any impairment loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the carrying amount of an individual asset shall not be reduced below its fair value.
Factors that may indicate potential impairment and trigger an impairment test include, but are not limited to, general macroeconomic conditions, conditions specific to the industry and market, an adverse change in legal factors, business climate or operational performance obligation are recorded as deferred revenue.of the business, and sustained decline in the stock price and market capitalization compared to the net book value.
Calculating the fair value of a reporting unit, an asset group and an individual asset involves significant estimates and assumptions. These estimates and assumptions include, among others, projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables. Changes in these factors and assumptions used can materially affect the amount of impairment loss recognized in the period the asset was considered impaired.
Cash, Cash Equivalents, and Restricted Cash
Sangamo considers all highly liquid investments purchased with original maturities of three months or less at the purchase date to be cash equivalents. Cash and cash equivalents consist of cash, deposits in demand money market accounts and U.S. government-sponsored entity debt securities. Restricted cash consists of a letter of credit for $1.5 million, representing a deposit for the lease of the corporate headquarters in Brisbane, California.
A reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets to the amounts reported within the accompanying Condensed Consolidated Statements of Cash Flows is as follows (in thousands): | | | September 30,
2022 | | December 31,
2021 | | September 30,
2021 | | December 31,
2020 | | March 31,
2023 | | December 31,
2022 | | March 31,
2022 | | December 31,
2021 |
| Cash and cash equivalents | Cash and cash equivalents | $ | 94,570 | | | $ | 178,872 | | | $ | 176,954 | | | $ | 131,329 | | Cash and cash equivalents | $ | 78,241 | | | $ | 100,444 | | | $ | 120,257 | | | $ | 178,872 | |
| Non-current restricted cash | Non-current restricted cash | 1,500 | | | 1,500 | | | 1,500 | | | 1,500 | | Non-current restricted cash | 1,500 | | | 1,500 | | | 1,500 | | | 1,500 | |
| Cash, cash equivalents, and restricted cash as reported within the accompanying Condensed Consolidated Statements of Cash Flows | Cash, cash equivalents, and restricted cash as reported within the accompanying Condensed Consolidated Statements of Cash Flows | $ | 96,070 | | | $ | 180,372 | | | $ | 178,454 | | | $ | 132,829 | | Cash, cash equivalents, and restricted cash as reported within the accompanying Condensed Consolidated Statements of Cash Flows | $ | 79,741 | | | $ | 101,944 | | | $ | 121,757 | | | $ | 180,372 | |
Leases
The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether it has the right to control the identified asset. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. Right-of-use assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.
As the implicit rate in the Company’s leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of remaining lease payments. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease in a similar economic environment. The Company considers its credit risk, term of the lease, and total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise any such options. Rent expense for the Company’s operating leases is recognized on a straight-line basis over the lease term. The Company will evaluate the lease arrangement for impairment whenever events or changes in circumstances indicate that the carrying amounts of the right-of-use asset may not be fully recoverable. To the extent an impairment of the right-of-use asset is recognized, the Company will recognize lease impairment and subsequently amortize the remaining lease asset on a straight-line basis (unless another systematic basis is more representative of the pattern in which the Company expects to consume the future economic benefits from the asset) from the date of impairment to the earlier of the end of the right-of-use asset’s useful life or the end of the lease term.
The Company has elected not to separate lease and non-lease components for its real estate and copier leases and, as a result, accounts for any lease and non-lease components as a single lease component. The Company has also elected not to apply the recognition requirement to any leases with a term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to exercise.
Recently Adopted Accounting Pronouncements
None.
NOTE 2—FAIR VALUE MEASUREMENTS
The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents and marketable securities, and the free shares asset.securities. Fair value is determined based on a three-tier hierarchy under the authoritative guidance for fair value measurements and disclosures that prioritizes the inputs used in measuring fair value as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurements and unobservable (i.e., supported by little or no market activity).
The fair value measurements of the Company’s cash equivalents and marketable securities are identified at the following levels within the fair value hierarchy (in thousands): | | | September 30, 2022 | | March 31, 2023 |
| | Fair Value Measurements | | Fair Value Measurements |
| | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 |
| Assets: | Assets: | | | | | | | | Assets: | | | | | | | |
| Cash equivalents: | Cash equivalents: | | Cash equivalents: | |
| Money market funds | Money market funds | $ | 44,911 | | | $ | 44,911 | | | $ | — | | | $ | — | | Money market funds | $ | 34,474 | | | $ | 34,474 | | | $ | — | | | $ | — | |
| | Total | Total | 44,911 | | | 44,911 | | | — | | | — | | Total | 34,474 | | | 34,474 | | | — | | | — | |
| Marketable securities: | Marketable securities: | | | | | | | | Marketable securities: | | | | | | | |
| U.S. government-sponsored entity debt securities | U.S. government-sponsored entity debt securities | 23,392 | | | — | | | 23,392 | | | — | | U.S. government-sponsored entity debt securities | 33,720 | | | — | | | 33,720 | | | — | |
| Commercial paper securities | Commercial paper securities | 120,386 | | | — | | | 120,386 | | | — | | Commercial paper securities | 70,836 | | | — | | | 70,836 | | | — | |
| Corporate debt securities | Corporate debt securities | 14,888 | | | — | | | 14,888 | | | — | | Corporate debt securities | 8,311 | | | — | | | 8,311 | | | — | |
| Asset-backed securities | Asset-backed securities | 37,773 | | | — | | | 37,773 | | | — | | Asset-backed securities | 14,613 | | | — | | | 14,613 | | | — | |
| U.S. treasury bills | U.S. treasury bills | 16,922 | | | — | | | 16,922 | | | — | | U.S. treasury bills | 5,596 | | | — | | | 5,596 | | | — | |
| Certificates of deposit | Certificates of deposit | 42,337 | | | — | | | 42,337 | | | — | | Certificates of deposit | 29,680 | | | — | | | 29,680 | | | — | |
| Total | Total | 255,698 | | | — | | | 255,698 | | | — | | Total | 162,756 | | | — | | | 162,756 | | | — | |
| Total cash equivalents and marketable securities | Total cash equivalents and marketable securities | $ | 300,609 | | | $ | 44,911 | | | $ | 255,698 | | | $ | — | | Total cash equivalents and marketable securities | $ | 197,230 | | | $ | 34,474 | | | $ | 162,756 | | | $ | — | |
|
| | | December 31, 2021 | | December 31, 2022 |
| | Fair Value Measurements | | Fair Value Measurements |
| | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 |
| Assets: | Assets: | | | | | | | | Assets: | | | | | | | |
| Cash equivalents: | Cash equivalents: | | Cash equivalents: | |
| Money market funds | Money market funds | $ | 119,919 | | | $ | 119,919 | | | $ | — | | | $ | — | | Money market funds | $ | 50,820 | | | $ | 50,820 | | | $ | — | | | $ | — | |
| Total | Total | 119,919 | | | 119,919 | | | — | | | — | | Total | 50,820 | | | 50,820 | | | — | | | — | |
| Marketable securities: | Marketable securities: | | | | | | | | Marketable securities: | | | | | | | |
| U.S. government-sponsored entity debt securities | U.S. government-sponsored entity debt securities | 30,614 | | | — | | | 30,614 | | | — | | U.S. government-sponsored entity debt securities | 18,417 | | | — | | | 18,417 | | | — | |
| Commercial paper securities | Commercial paper securities | 105,757 | | | — | | | 105,757 | | | — | | Commercial paper securities | 101,165 | | | — | | | 101,165 | | | — | |
| Corporate debt securities | Corporate debt securities | 33,682 | | | — | | | 33,682 | | | — | | Corporate debt securities | 11,670 | | | — | | | 11,670 | | | — | |
| Asset-backed securities | Asset-backed securities | 70,701 | | | — | | | 70,701 | | | — | | Asset-backed securities | 24,792 | | | — | | | 24,792 | | | — | |
| U.S. treasury bills | | U.S. treasury bills | 7,938 | | | — | | | 7,938 | | | — | |
| Certificates of deposit | Certificates of deposit | 45,091 | | | — | | | 45,091 | | | — | | Certificates of deposit | 37,461 | | | — | | | 37,461 | | | — | |
| Agency bonds | | Agency bonds | 5,590 | | | — | | | 5,590 | | | — | |
| Total | Total | 285,845 | | | — | | | 285,845 | | | — | | Total | 207,033 | | | — | | | 207,033 | | | — | |
| Total cash equivalents and marketable securities | Total cash equivalents and marketable securities | $ | 405,764 | | | $ | 119,919 | | | $ | 285,845 | | | $ | — | | Total cash equivalents and marketable securities | $ | 257,853 | | | $ | 50,820 | | | $ | 207,033 | | | $ | — | |
|
Cash Equivalents and Marketable Securities
The Company generally classifies its marketable securities as Level 2. Instruments are classified as Level 2 when observable market prices for identical securities that are traded in less active markets are used. When observable market prices for identical securities are not available, such instruments are priced using benchmark curves, benchmarking of like securities, sector groupings, matrix pricing and valuation models. These valuation models are proprietary to the pricing providers or brokers and incorporate a number of inputs, including in approximate order of priority: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. For certain security types, additional inputs may be used, or some of the standard inputs may not be applicable. Evaluators may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs listed are available for use in the evaluation process for each security evaluation on any given day.
NOTE 3—CASH EQUIVALENTS AND MARKETABLE SECURITIES
The table below summarizes the Company’s cash equivalents and marketable securities (in thousands): | | | Amortized
Cost | | Gross
Unrealized
Gains | | Gross
Unrealized
Losses | | Estimated
Fair Value | | Amortized
Cost | | Gross
Unrealized
Gains | | Gross
Unrealized
Losses | | Estimated
Fair Value |
| September 30, 2022 | | | | | | | | |
| March 31, 2023 | | March 31, 2023 | | | | | | | |
| Assets | Assets | | Assets | |
| Cash equivalents: | Cash equivalents: | | Cash equivalents: | |
| Money market funds | Money market funds | $ | 44,911 | | | $ | — | | | $ | — | | | $ | 44,911 | | Money market funds | $ | 34,474 | | | $ | — | | | $ | — | | | $ | 34,474 | |
| | Total | Total | 44,911 | | | — | | | — | | | 44,911 | | Total | 34,474 | | | — | | | — | | | 34,474 | |
| Marketable securities: | Marketable securities: | | | | | | | | Marketable securities: | | | | | | | |
| U.S. government-sponsored entity debt securities | U.S. government-sponsored entity debt securities | 23,832 | | | — | | | (440) | | | 23,392 | | U.S. government-sponsored entity debt securities | 33,753 | | | 94 | | | (127) | | | 33,720 | |
| Commercial paper securities | Commercial paper securities | 120,750 | | | 11 | | | (375) | | | 120,386 | | Commercial paper securities | 70,906 | | | 9 | | | (79) | | | 70,836 | |
| Corporate debt securities | Corporate debt securities | 15,050 | | | — | | | (162) | | | 14,888 | | Corporate debt securities | 8,335 | | | — | | | (24) | | | 8,311 | |
| Asset-backed securities | Asset-backed securities | 38,039 | | | 2 | | | (268) | | | 37,773 | | Asset-backed securities | 14,689 | | | — | | | (76) | | | 14,613 | |
| U.S. treasury bills | U.S. treasury bills | 16,943 | | | — | | | (21) | | | 16,922 | | U.S. treasury bills | 5,598 | | | — | | | (2) | | | 5,596 | |
| Certificate of deposits | 42,478 | | | 5 | | | (146) | | | 42,337 | | |
| Certificates of deposit | | Certificates of deposit | 29,761 | | | 2 | | | (83) | | | 29,680 | |
| Total | Total | 257,092 | | | 18 | | | (1,412) | | | 255,698 | | Total | 163,042 | | | 105 | | | (391) | | | 162,756 | |
| Total cash equivalents and marketable securities | Total cash equivalents and marketable securities | $ | 302,003 | | | $ | 18 | | | $ | (1,412) | | | $ | 300,609 | | Total cash equivalents and marketable securities | $ | 197,516 | | | $ | 105 | | | $ | (391) | | | $ | 197,230 | |
| | December 31, 2021 | | |
| December 31, 2022 | | December 31, 2022 | |
| Assets | Assets | | Assets | |
| Cash equivalents: | Cash equivalents: | | Cash equivalents: | |
| Money market funds | Money market funds | $ | 119,919 | | | $ | — | | | $ | — | | | $ | 119,919 | | Money market funds | $ | 50,820 | | | $ | — | | | $ | — | | | $ | 50,820 | |
| Total | Total | 119,919 | | | — | | | — | | | 119,919 | | Total | 50,820 | | | — | | | — | | | 50,820 | |
| Marketable securities: | Marketable securities: | | | | | | | | Marketable securities: | | | | | | | |
| U.S. government-sponsored entity debt securities | U.S. government-sponsored entity debt securities | 30,700 | | | 1 | | | (87) | | | 30,614 | | U.S. government-sponsored entity debt securities | 18,710 | | | — | | | (293) | | | 18,417 | |
| Commercial paper securities | Commercial paper securities | 105,792 | | | 7 | | | (42) | | | 105,757 | | Commercial paper securities | 101,336 | | | 22 | | | (193) | | | 101,165 | |
| Corporate debt securities | Corporate debt securities | 33,723 | | | 1 | | | (42) | | | 33,682 | | Corporate debt securities | 11,760 | | | — | | | (90) | | | 11,670 | |
| Asset-backed securities | Asset-backed securities | 70,807 | | | 1 | | | (107) | | | 70,701 | | Asset-backed securities | 24,970 | | | 2 | | | (180) | | | 24,792 | |
| Certificate of deposits | 45,116 | | | 1 | | | (26) | | | 45,091 | | |
| U.S. treasury bills | | U.S. treasury bills | 7,950 | | | — | | | (12) | | | 7,938 | |
| Certificates of deposit | | Certificates of deposit | 37,599 | | | 4 | | | (142) | | | 37,461 | |
| Agency bonds | | Agency bonds | 5,598 | | | — | | | (8) | | | 5,590 | |
| Total | Total | 286,138 | | | 11 | | | (304) | | | 285,845 | | Total | 207,923 | | | 28 | | | (918) | | | 207,033 | |
| Total cash equivalents and marketable securities | Total cash equivalents and marketable securities | $ | 406,057 | | | $ | 11 | | | $ | (304) | | | $ | 405,764 | | Total cash equivalents and marketable securities | $ | 258,743 | | | $ | 28 | | | $ | (918) | | | $ | 257,853 | |
The fair value of marketable securities by contractual maturity were as follows (in thousands): | | | September 30,
2022 | | December 31,
2021 | | March 31,
2023 | | December 31,
2022 |
| Maturing in one year or less | Maturing in one year or less | $ | 218,998 | | | $ | 197,676 | | Maturing in one year or less | $ | 127,147 | | | $ | 177,188 | |
| Maturing after one year through five years | Maturing after one year through five years | 36,700 | | | 88,169 | | Maturing after one year through five years | 35,609 | | | 29,845 | |
| Total | Total | $ | 255,698 | | | $ | 285,845 | | Total | $ | 162,756 | | | $ | 207,033 | |
There were no realized gains and losses on the sales of investments during the three and nine months ended September 30, 2022.March 31, 2023. Realized gains and losses on the sales of investments were insignificantnot material during the three and nine months ended September 30, 2021.March 31, 2022. Total unrealized gains for securities with net gains in accumulated other comprehensive income were not material for the three months ended March 31, 2023.
The Company manages credit risk associated with its investment portfolio through its investment policy, which limits purchases to high-quality issuers and also limits the amount of its portfolio that can be invested in a single issuer. The Company
did not record an allowance for credit losses or other impairment charges related to its marketable securities for the three and nine months ended September 30, 2022March 31, 2023 and 2021.2022.
The Company had unrealized losses related to its marketable securities for the three and nine months ended September 30, 2022March 31, 2023 and 2021.2022. The Company had no material unrealized losses, individually and in the aggregate, for marketable
securities that are in a continuous unrealized loss position for greater than 12 months as of September 30, 2022March 31, 2023 and December 31, 2021.2022. Based on the scheduled maturities of its investments, the Company determined that it was more likely than not that it will hold these investments for a period of time sufficient for a recovery of its amortized cost basis. Total unrealized gains for securities with net gains in accumulated other comprehensive income were not material for the three and nine months ended September 30, 2022. TheThese unrealized losses were not attributed to credit risk and were associated with changes in market conditions. The Company periodically reviews its marketable securities for indications of credit losses. The Company considers factors such as the duration, the magnitude and the reason for the decline in value, the potential recovery period, creditworthiness of the issuers of the securities and its intent to sell. For marketable securities, it also considers whether (i) it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. No significant facts or circumstances have arisen to indicate that there has been any significant deterioration in the creditworthiness of the issuers of the securities held by the Company. Based on the Company’s review of these securities, including the assessment of the duration and severity of the unrealized losses and the Company’s ability and intent to hold the investments until maturity, the Company determined that no allowance for credit losses related to its marketable securities was required at either September 30, 2022March 31, 2023 or December 31, 2021.2022.
NOTE 4—BASIC AND DILUTED NET LOSSINCOME (LOSS) PER SHARE
Basic net lossincome (loss) per share attributable to Sangamo Therapeutics, Inc. stockholders has been computed by dividing net loss attributable to Sangamo Therapeutics, Inc. stockholdersincome (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted net lossincome (loss) per share attributable to Sangamo Therapeutics, Inc. stockholders is calculated by dividing net loss attributable to Sangamo Therapeutics, Inc. stockholdersincome (loss) by the weighted-average number of shares of common stock plus potentially dilutive securities outstanding during the period, without considerationperiod.
The components of any potential dilutive securities,basic and diluted net income (loss) per share are as their effect would be anti-dilutive.follows (in thousands, except per share amounts): | | | | | | | | | | | | | | | |
| Three Months Ended
March 31, | | |
| 2023 | | 2022 | | | | |
| Numerator: | | | | | | | |
| Net income (loss) | $ | 21,133 | | | $ | (43,977) | | | | | |
| Denominator: | | | | | | | |
| Basic: | | | | | | | |
| Weighted average number of common shares outstanding - basic | 168,533 | | | 146,218 | | | | | |
| Diluted: | | | | | | | |
| Weighted average number of common shares outstanding - basic | 168,533 | | | 146,218 | | | | | |
| | | | | | | |
| Dilutive effect of restricted stock units | 300 | | | — | | | | | |
| Dilutive effect of common stock pursuant to employee stock purchase plan | 348 | | | — | | | | | |
| Weighted average number of common shares outstanding - diluted | 169,181 | | | 146,218 | | | | | |
| Net income (loss) per share: | | | | | | | |
| Basic | $ | 0.13 | | | $ | (0.30) | | | | | |
| Diluted | $ | 0.12 | | | $ | (0.30) | | | | | |
The total numbercomputation of diluted net income per share for the three months ended March 31, 2023 excluded 14.7 million shares subject to stock options andbecause their inclusion would have had an anti-dilutive effect on diluted net income per share. The computation of diluted net loss per share for the three months ended March 31, 2022 excluded 19.1 million shares subject to stock options, restricted stock units (“RSUs”) outstanding, and the employee stock purchase plan (“ESPP”) shares reserved for issuance which are allbecause their inclusion would have had an anti-dilutive were excluded from consideration in the calculation ofeffect on diluted net loss per share attributable to Sangamo Therapeutics, Inc. stockholders. Stock options and RSUs outstanding and ESPP shares reserved for issuance as of September 30, 2022 and 2021 totaled 18,524,016 and 15,838,002, respectively.share.
NOTE 5—MAJOR CUSTOMERS, PARTNERSHIPS AND STRATEGIC ALLIANCES
Novartis Institutes for BioMedical Research, Inc.
On July 27, 2020, the Company entered into a collaboration and license agreement with Novartis Institutes for BioMedical Research, Inc. (“Novartis”) for the research, development and commercialization of gene regulation therapies to treat three neurodevelopmental disorders. Under the agreement, which was effective upon execution, the Company granted Novartis an exclusive, royalty bearing and worldwide license, under its relevant patents and know-how, to develop, manufacture and
commercialize certain of its zinc finger protein (“ZFP”ZF”) transcription factorstranscriptional regulators (“ZFP-TFs”ZF-TRs”) targeted to three undisclosed genes that are associated with certain neurodevelopmental disorders, including autism spectrum disorder and intellectual disability. The Company iswas performing early research activities over the collaboration period for each gene target and manufacture the ZFP-TFsZF-TRs required for such research, costs of which are funded by Novartis. Novartis iswas responsible for additional research activities, studies enabling investigational new drug applications (“INDs”),INDs, clinical development, regulatory approvals, manufacturing of preclinical, clinical and approved products, and global commercialization. Subject to certain exceptions set forth in the agreement, the Company iswas prohibited from developing, manufacturing or commercializing any therapeutic product targeting any of the three genes that are the subject of the collaboration. Novartis also hashad the option to license certain of the Company’s proprietary adeno-associated viruses (“AAVs”) for the sole purpose of developing, manufacturing and commercializing licensed products arising from the collaboration.
UnderIn March 2023, Novartis notified the Company of its termination for convenience, effective June 11, 2023 (the “Novartis Termination Date”), of the collaboration agreement. Novartis has indicated to the Company that the termination relates to a recent strategic review. As of the Novartis Termination Date, the collaboration agreement will be terminated in its entirety and following the Novartis Termination Date, the Company will not be entitled to receive any further milestone payments or royalties from Novartis. As of the Novartis Termination Date, the parties will have no further obligations to develop or to fund the development of any collaboration research programs under the collaboration agreement.
Upon entering the agreement, Novartis paid the Company a $75.0 million upfront license feefee. Novartis was also obligated to pay the Company for the use of its resources and reimburse third-party costs incurred in August 2020. In addition to this fee and the cost reimbursements forCompany’s conduct of early research activities, the Company is eligible to earn from Novartis up to $420.0 million in development milestones and up to $300.0 million in commercial milestones.activities. The Company iswas also eligible to earn from Novartis tiered high single-digit to sub-teen double-digitdevelopment and commercial milestones and royalties on potential net commercial sales of licensed products arising from the collaboration. These royalty payments will be subject to reduction due to patent expiration, losscollaboration, none of market exclusivity and payments made under certain licenses for third-party intellectual property.which have been triggered or earned. The agreement willwas going to continue, on a product-by-product and country-by-country basis, until the expiration of the applicable royalty term. Novartis has the right to terminate the agreement, in its entirety or on a target-by-target basis, for any reason after a specified notice period. Each party also has the right to terminate the agreement on account of the other party’s bankruptcy or material, uncured breach.
All payments received under the agreement when earned, are non-refundable and non-creditable. The transaction price of $95.1 million includes the upfront license fee of $75.0 million and estimated research costs of $20.1 million to be provided over the estimated research period.million. All clinical or regulatory milestone amounts were considered fully constrained at inception of
throughout the agreement. As part of its evaluationterm of the constraint, the Company considered numerous factors, including the fact that achievement of the milestones at this time is uncertain and contingent upon future periods when the uncertainty related to the variable consideration is resolved. The Company will re-evaluate the transaction price, including the estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur.agreement.
The Company assessed the agreement with Novartis in accordance with ASC Topic 606 and concluded that Novartis iswas a customer. The Company has identified a single performance obligation within this arrangement as a license to the technology and ongoing research services. The Company concluded that the license iswas not discrete as it doesdid not have stand-alone value to Novartis apart from the research services to be performed pursuant to the agreement. As a result, the Company recognizesrecognized revenue from the upfront payment based on proportional performance of the ongoing research services through the estimated research period. The estimation of progress towards the satisfaction of performance obligation and project cost iswas reviewed quarterly and adjusted, as needed, to reflect the Company’s current assumptions regarding the timing of its performance obligation.
The notice of termination was accounted for as a modification of the contract, as it changed both the scope of the Company’s remaining services and the consideration to which the Company was entitled. The effect of the modification was not material, as the Company was nearing the completion of its assigned early research activities, and consequently, of its sole performance obligation.
As of September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company had a receivable of $2.0$2.1 million and $1.9$2.2 million, respectively, and deferred revenue of $17.7$1.9 million and $40.9$9.6 million, respectively, related to this agreement. The deferred revenue is expected to be recognized during the quarter ended June 30, 2023.
Revenues recognized under the agreement were as follows (in thousands): | | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | Three Months Ended
March 31, | |
| | 2022 | | 2021 | | 2022 | | 2021 | | 2023 | | 2022 | |
| Revenue related to Novartis agreement: | Revenue related to Novartis agreement: | | | | | | | | Revenue related to Novartis agreement: | | | | |
| Recognition of upfront license fee | Recognition of upfront license fee | $ | 7,582 | | | $ | 9,093 | | | $ | 23,222 | | | $ | 22,852 | | Recognition of upfront license fee | $ | 7,696 | | | $ | 7,018 | | |
| Research services | Research services | 2,028 | | | 2,421 | | | 6,211 | | | 6,104 | | Research services | 2,059 | | | 1,877 | | |
| Total | Total | $ | 9,610 | | | $ | 11,514 | | | $ | 29,433 | | | $ | 28,956 | | Total | $ | 9,755 | | | $ | 8,895 | | |
The Company paid $1.5 million for financial advisory fees during the year ended December 31, 2020, equal to 2% of $75.0 million received for the upfront license fee related to the collaboration and license agreement with Novartis. The Company recognized $1.5 million as a contract asset as such amount represents a cost of obtaining the agreement. This balance is amortized and included inreleased into general and administrative expenses on a systematic basis consistent with the transfer of the services to Novartis in accordance with ASC Topic 340, Other Assets and Deferred Costs (“ASC Topic 340”). The Company amortizedrecognized as expense $0.2 million and $0.5$0.1 million during the three and nine months ended September 30,March 31, 2023 and 2022, respectively, and $0.2 million and $0.5 million during the three and nine months ended September 30, 2021, respectively.
Biogen MA, Inc.
In February 2020, the Company entered into a collaboration and license agreement with Biogen MA, Inc. (“BIMA”) and Biogen International GmbH (together with BIMA, “Biogen”) for the research, development and commercialization of gene regulation therapies for the treatment of neurological diseases. The companies planplanned to leverage the Company’s proprietary ZFPZF technology delivered via AAV to modulate expression of key genes involved in neurological diseases. Concurrently with the execution of the collaboration agreement, the Company entered into a stock purchase agreement with BIMA, pursuant to which BIMA agreed to purchase 24,420,157 shares of the Company’s common stock (the “Biogen Shares”), at a price per share of $9.2137, for an aggregate purchase price of approximately $225.0 million.
The collaboration agreement became effective in April 2020 following2020.
In March 2023, Biogen notified the Company of its termination for convenience, effective June 15, 2023 (the “Biogen Termination Date”), of the collaboration agreement. Biogen has indicated to the Company that the termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and satisfaction of other customary closing conditions, including the payment of $225.0 million for the purchaserelates to a recent strategic review. As of the Biogen Shares.Termination Date, the collaboration agreement will be terminated in its entirety and following the Biogen Termination Date, the Company will not be entitled to receive any further milestone payments or royalties from Biogen. As of the Biogen Termination Date, the parties will have no further obligations to develop or to fund the development of any collaboration research programs under the collaboration agreement.
Under the collaboration agreement, Biogen paid the Company an upfront license fee of $125.0 million in May 2020. The Company iswas also eligible to receive target selection, research, development, regulatory and commercial milestone payments that could total up to approximately $2.4 billion if Biogen selects all of the targets allowed under the agreement and all the specified milestones set forth in the agreement are achieved, which includes up to $925.0 million in pre-approval milestone payments and up to $1.5 billion in first commercial sale and other sales-based milestone payments. In addition, the Company is eligible to receive tiered high single-digit to sub-teen royalties on potential net commercial sales of licensed products arising from the collaboration. These royalty payments are subject to reduction due to patent expiration, entrycollaboration, none of biosimilar products to the market and payments made under certain licenses for third-party intellectual property.which have been triggered or earned.
Under the collaboration agreement, the Company granted to Biogen an exclusive, royalty bearing and worldwide license, under its relevant patents and know-how, to develop, manufacture and commercialize certain ZFPZF and/or AAV-based products directed to certain neurological disease gene targets selected by Biogen. Biogen has alreadyhad selected four targets over the course of these: ST-501 to treat tauopathies, ST-502 to treat synucleinopathies including Parkinson’s disease, a third product candidate targeting DM1, a neuromuscular disease,the collaboration and a fourth undisclosed neurological disease gene target. Biogen hashad exclusive rights to nominate up to
seven additional targets overtargets. These rights will expire upon the remaining period of five years from the effective date of the collaboration agreement.Biogen Termination Date. For each gene target selected by Biogen, the Company performsperformed early research activities, costs of which arewere shared by the companies, aimed at the development of the combination of proprietary central nervous system delivery vectors and ZFP-TFsZF-TRs (or potential other ZFPZF products) targeting therapeutically relevant genes. Biogen has assumed responsibility and costs for the IND-enabling studies, clinical development, related regulatory interactions, and global commercialization. The Company is responsible for manufacturing activities for the initial clinical trials for the first three products of the collaboration and plans to leverage its in-house manufacturing capacity, where appropriate, which is currently in development. Biogen is responsible for manufacturing activities beyond the first clinical trial for each of the first three products. The Company’s research activities for any targets will be performed over the period not to exceed seven years from the effective date of the agreement (i.e., through April 2027). Subject to certain exceptions set forth in the collaboration agreement, the Company is prohibited from developing, manufacturing or commercializing any therapeutic product directed to the targets selected by Biogen.
The collaboration agreement continues on a product-by-product and country-by-country basis until the expiration of all applicable royalty terms. Biogen has the right to terminate the collaboration agreement, in its entirety or on a target-by-target basis, for any reason after a specified notice period, and also has the right to replace up to ten targets. Each party has the right to terminate this agreement on account of the other party’s bankruptcy or material, uncured breach. In addition, the Company may terminate the collaboration agreement if Biogen challenges any patents licensed by the Company to Biogen.
Pursuant to the terms of the stock purchase agreement, Biogen has agreed not to, without the Company’s prior written consent and subject to specified conditions and exceptions, directly or indirectly acquire shares of the Company’s outstanding common stock, seek or propose a tender or exchange offer or merger between the parties, solicit proxies or consents with respect to any matter, or undertake other specified actions related to the potential acquisition of additional equity interests in the Company. Such standstill restrictions expire on the earlier of the three-year anniversary of the effectiveness of the collaboration agreement and the date that Biogen beneficially owns less than 5% of the Company’s common stock.
The Company assessed the collaboration agreement with Biogen in accordance with ASC Topic 606 and concluded that Biogen is a customer. The transaction price of $204.6 million includesincluded the upfront license fee of $125.0 million and the excess consideration from the stock purchase of $79.6 million, which representsrepresented the difference between the $225.0 million received for the purchase of the Biogen Shares and the $145.4 million estimated fair value of the equity issued. The equity issued to Biogen was valued using an option pricing model to reflect certain holding period restrictions. None of the target selection fees and clinical or regulatory milestones have beenwere included in the transaction price, as all such amounts arewere fully constrained. As part of its evaluationconstrained throughout the term of the constraint,collaboration agreement. The transaction price also included actual and estimated cost-sharing payments by Biogen for the work by Company researchers and reimbursement of the Company’s costs incurred with third parties. The amounts paid and expected to be paid to Biogen for the use of Biogen’s resources and its expenses were consideration paid to a customer. Since the Company considered numerous factors, includingdid not acquire distinct goods or services in exchange for these payments, they reduced the fact that nomination of additional targetstransaction price and achievementwere recorded as reduction in revenue. The Company used the expected value method to estimate cost sharing payments, taking into account the impact of the milestones at this time is uncertain and contingent upon future periods whenconstraint. Variable consideration was included in the uncertainty relatedtransaction price only to the variable consideration is resolved.extent it was probable a significant reversal of cumulative revenues recognized would not occur. The Company will re-evaluatere-evaluated the transaction price as uncertain events arewere resolved or other changes in circumstances occur.occurred.
The Company has identified a single performance obligation withinconcluded that the licenses to its intellectual property for each target were not distinct from the related research and development activities, as the licensed technology was not shared with and could not be utilized by Biogen collaboration agreement, which is a stand-ready obligation consistingwithout the research services to be performed by the Company pursuant to the agreement. On the other hand, each combination of a series of distinct days of research services, during which Biogen obtains accesslicense to the Company’sCompany's intellectual property as applied to a specific target and the related research and development activities are a discrete research project that is distinct from any other target’s project. The targets Biogen could select were options that provided Biogen with material rights, as the exercise of the options did not require payment of a fee commensurate with the value of the incremental license rights. As a result, such options also represented performance obligations.
At contract inception, the Company allocated fixed consideration of $204.6 million included in the initial transaction price to the existing targets’ license and research resources. Revenue fromservices performance obligations and those performance obligations for options that include material rights, based on their relative standalone selling prices. Through March 31, 2023, one material right had expired, and seven material rights remained outstanding and are expected to expire during the upfront license fee relates to access to the license and Company’s obligation to stand-ready to perform such research services corresponding to the targets selected by Biogen. Asquarter ending June 30, 2023.
The notice of termination was accounted for as a result of this obligation to perform research services when and if requested throughout the durationmodification of the contract, as it changed both the upfront license feescope of the Company’s remaining services and the excess consideration to which the Company was entitled. The remaining research and development activities to be undertaken by the Company after the notice of termination were not distinct from the stock purchase will be recognized over timerelated
activities performed prior to the modification on a straight-line basis consistent with the resources expected to be dedicated to providingsame targets but were distinct from the activities on other targets. The remaining material rights were also distinct from the prior research services through April 2027,and development activities. To account for the estimated periodeffects of the obligation.modification, the Company updated its estimate of the transaction price and allocated the remaining transaction consideration based on the relative standalone selling prices of the remaining distinct goods and services. Progress for each ongoing performance obligation was then remeasured using an updated estimate of the total level of effort required for each performance obligation and the total revised transaction price and a cumulative catch-up in revenue was recorded. The estimated periodmodification resulted in an increase in revenue of performance is reviewed quarterly and adjusted, as needed, to reflect the Company’s current assumptions regarding the timing of its deliverable. Revenue from the reimbursement by Biogen of shared costs of early research activities performed by Sangamo is recognized as the research services are performed. $127.1 million.
As of September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company had a receivable of $1.7$0.7 million and $2.8$0.5 million, respectively, and deferred revenue of $132.1$1.5 million and $154.0$132.2 million, respectively, related to this agreement. Changes in deferred revenue balances during the three months ended March 31, 2023 relate primarily to the impact of the contract modification. The amounts of transaction price remaining to be recognized were $1.7 million and $151.3 million as of March 31, 2023 and December 31, 2022, respectively. The amounts remaining at March 31, 2023 are expected to be recognized during the quarter ending June 30, 2023.
Revenues recognized under the agreement were as follows (in thousands):
| | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | Three Months Ended
March 31, | |
| | 2022 | | 2021 | | 2022 | | 2021 | | 2023 | | 2022 | |
| Revenue related to Biogen agreement: | Revenue related to Biogen agreement: | | | | | | | | Revenue related to Biogen agreement: | | | | |
| Recognition of license and stand-ready fee | $ | 7,306 | | | $ | 7,306 | | | $ | 21,918 | | | $ | 21,918 | | |
| Research services | 2,107 | | | 3,661 | | | 8,740 | | | 10,266 | | |
| Recognition of license and other fixed consideration | | Recognition of license and other fixed consideration | $ | 130,630 | | | $ | 7,306 | | |
| Cost-sharing payments for research services, net variable consideration | | Cost-sharing payments for research services, net variable consideration | 1,672 | | | 3,887 | | |
| Total | Total | $ | 9,413 | | | $ | 10,967 | | | $ | 30,658 | | | $ | 32,184 | | Total | $ | 132,302 | | | $ | 11,193 | | |
The Company paid $7.0 million for financial advisory fees during the year ended December 31, 2020, equal to 2% of $225.0 million received for the sale of shares and 2% of $125.0 million received for the upfront fee. The fees incurred related to
both the collaboration agreement with Biogen and the stock purchase agreement for the sale of shares. The Company believes that the allocation of fees on a relative fair value basis between the two agreements is reasonable. The Company recognized $4.1 million, which represents 2% of the initial transaction price of $204.6 million, as a contract cost asset. This balance is amortized and included inreleased into general and administrative expenses on a systematic basis consistent with the transfer of the services to Biogen in accordance with ASC Topic 340. The Company amortized $0.1recognized as expense $2.6 million and $0.4$0.1 million during the three and nine months ended September 30,March 31, 2023 and 2022, respectively, and $0.1 million and $0.4 million during the three and nine months ended September 30, 2021, respectively. The Company recognized $2.9 million, which represented 2% of the $145.4 million estimated fair value of the equity issued, as a share issuance cost and recorded this amount in equity as a reduction in net proceeds during the year ended December 31, 2020.
Kite Pharma, Inc.
In February 2018, the Company entered into a global collaboration and license agreement with Kite Pharma, Inc. (“Kite”), a Gilead Sciences, Inc. subsidiary, which became effective on April 5, 2018 (“Effective Date”), and was amended and restated in September 2019, for the research, development, and commercialization of potential engineered cell therapies for cancer. In this collaboration, Sangamo is working together with Kite on a research program under which the companies are designing zinc finger nucleases (“ZFNs”) and viral vectors to disrupt and insert certain genes in T-cells and natural killer cells (“NK-cells”) including the insertion of genes that encode chimeric antigen receptors (“CARs”), T-cell receptors (“TCRs”), and NK-cell receptors (“NKRs”) directed to mutually agreed targets. Kite is responsible for all clinical development, manufacturing and commercialization of any resulting products.
Subject to the terms of this agreement, the Company granted Kite an exclusive, royalty-bearing, worldwide sublicensable license under the Company’s relevant patents and know-how to develop, manufacture and commercialize, for the purpose of treating cancer, specific cell therapy products that may result from the research program and that are engineered ex vivo using selected ZFNs and viral vectors developed under the research program to express CARs, TCRs or NKRs directed to candidate targets.
During the research program term and subject to certain exceptions, the Company is prohibited from researching, developing, manufacturing and commercializing, for the purpose of treating cancer, any cell therapy product that, as a result of ex vivo genome editing, expresses a CAR, TCR or NKR that is directed to a target expressed on or in a human cancer cell. After the research program term concludes and subject to certain exceptions, the Company will be prohibited from developing, manufacturing and commercializing, for the purpose of treating cancer, any cell therapy product that, as a result of ex vivo genome editing, expresses a CAR, TCR or NKR that is directed to a candidate target.
Following the Effective Date, the Company received a $150.0 million upfront payment from Kite. In addition, Kite reimburses the Company’s direct costs to conduct the joint research program. Sangamo is also eligible to receive contingent development- and sales-based milestone payments that could total up to $3.0 billion if all of the specified milestones set forth in this agreement are achieved. Of this amount, approximately $1.3 billion relates to the achievement of specified research, clinical development, regulatory and first commercial sale milestones, and approximately $1.8 billion relates to the achievement of specified sales-based milestones if annual worldwide net sales of licensed products reach specified levels. Each development- and sales-based milestone payment is payable (i) only once for each licensed product, regardless of the number of times that the associated milestone event is achieved by such licensed product, and (ii) only for the first 10 times that the associated milestone event is achieved regardless of the number of licensed products that may achieve such milestone event. In addition, the Company is entitled to receive escalating, tiered royalty payments with a percentage in the single digits based on future annual worldwide net sales of licensed products. These royalty payments are subject to reduction due to patent expiration, entry of biosimilar products to the market and payments made under certain licenses for third-party intellectual property.
The initial research term in the agreement is six years from the Effective Date. Kite has an option to extend the research term for up to two additional one-year periods for a separate upfront fee of $10.0 million per year. All contingent payments under the agreement, when earned, will be non-refundable and non-creditable. In connection withThrough the amendment and restatement of the agreement in September 2019, the Company entered into a new research plan withand Kite with estimated reimbursable service cost of approximately $3.4 million, which is included inagreed to expand the total transaction price. The Company concluded the total transaction price under this agreement is $189.3 million and includes the upfront license fee of $150.0 million and $39.3 million estimated reimbursable service costs for identified research projects over the estimated performance period. Further, the Company concluded the estimated fees for the presumed exercisescope of the research term extension options and all milestone amounts are fully constrained. As partcollaboration program to incorporate the use of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestones at this time is uncertain and contingent upon future events which are uncertain at this time. The Company will re-evaluate the transaction price including the estimated variable consideration included in the transaction price and all constrained amounts in each reporting period and as uncertain events are resolvedlentiviral or other changes in circumstances occur. None of the development and sales-based milestone payments have been included in the transaction price.
The Company assessed the agreement with Kite in accordance with ASC Topic 606 and concluded that Kite is a customer.retroviral vectors provided by Kite. Kite has the right to terminate this agreement in its entirety or on a per licensed product or per candidate target basis for any reason after a specified notice period. Each party has the right to terminate this agreement on account of the other party’s bankruptcy or material, uncured breach.
The Company assessed the agreement with Kite in accordance with ASC Topic 606 and concluded that Kite is a customer. The transaction price includes the upfront license fee of $150.0 million and estimated reimbursable service costs for the research projects over the estimated performance period. None of the clinical or regulatory milestones have been included in the transaction price, as none of the milestones have yet been achieved, and all amounts are fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestones at this time is uncertain and contingent upon future periods when the uncertainty related to the variable consideration is resolved.
The transaction price also includes actual and estimated payments by Kite for the work by Company researchers and reimbursement of the Company’s costs incurred with third-parties. The Company uses the expected value method to estimate payments related to the Company’s researchers’ work, taking into account the impact of constraint. Variable consideration is included in the transaction price only to the extent it is probable a significant reversal of cumulative revenues recognized would not occur. The Company will re-evaluate the transaction price including the estimated variable consideration included in the transaction price and all constrained amounts in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
The Company has identified the primaryfour performance obligations within the Kite agreement as:as follows: (1) a license to the technology alongcombined with the stand-ready obligation to perform research and development services to apply the Company’s technology to Kite-selected targets; (2) production of research materials; and (2)(3-4) two material rights, each for an extension of the research period for an additional one-year term. Such extensions contain material rights because their exercise does not require payment of a fee that is commensurate with the value of the incremental research term. The license to the Company’s intellectual property is not distinct from the related research and development activities as the licensed technology is not shared with and cannot be utilized by Kite without the research services performed by the Company.
The Company allocated variable consideration (payments by Kite for the work performed by the Company’s researchers and third-party costs, as well as any future milestones and royalties) to the specific performance obligations to which they relate, as such allocation would meet the allocation objective in ASC Topic 606. The Company allocated the fixed consideration of $150.0 million to the performance obligations based on their relative standalone selling prices. Standalone selling prices of optional research years are similar to those of the initial year, but additionally take into account the intrinsic value of the discount upon exercise and the likelihood of exercise.
Fees allocated to options with material rights are deferred until the options are exercised or expire. The exercise of options is accounted for as contract continuation, with target selection fees and estimated variable consideration included in the transaction price at that time and allocated specifically to the respective target’s performance obligation.
Revenue for the combined license and research services performance obligations is recognized over time, as Kite consumes the benefit of such services as they are being performed by the Company. For the license combined with research and development services performance obligation, the Company recognizes revenue based on proportional performance of the ongoing research services over the period during which the Company performs the services. Revenue fromThe estimation of progress towards the upfront license fee relates to access to the license and Company’s obligation to stand-ready to perform such research services as additional targets are selected by Kite. As a resultsatisfaction of this performance obligation to perform research services when and if requested throughout the duration of the contract, the fee for the license and the stand-ready obligation will be recognized over time on a straight-line basis through April 2024, the estimated period of the stand-ready obligation. Revenue from the reimbursable costs related to the integrated service deliverable is recognized as the research services are performed. Related costs and expenses under these arrangements have historically approximated the revenues recognized. The estimated period of performance and project cost iscosts are reviewed quarterly and adjusted, as needed, to reflect the Company’s current assumptions regarding the timingestimated volume of its deliverables. required activities. The production of research materials performance
obligation is accounted for under the right to invoice practical expedient, as the Company has the right to invoice Kite for these services in an amount that corresponds directly with the value of the services.
As of September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company had a receivable of $0.6$1.0 million and $0.1$0.7 million, respectively, and deferred revenue of $37.8$8.0 million and $56.5$19.4 million, respectively, related to this agreement. Changes in deferred revenue balances during the three months ended March 31, 2023 relate to a reduction in the estimated future level of the Company's research and development services, as well as ongoing normal progress in the delivery of the performance obligations. The amounts of transaction price (excluding the amounts recognized as invoiced for the production of research materials performance obligation) remaining to be recognized were $8.6 million and $21.2 million, of which $1.5 million relates to fees allocated to options with material rights, as of March 31, 2023 and December 31, 2022, respectively. These amounts are expected to be recognized over the period through 2024. The timing of recognition will be affected by the volume of annual activity under the agreement and by whether and when Kite exercises options for additional years of services and could be subject to significant changes.
Revenues recognized under the agreement were as follows (in thousands): | | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | Three Months Ended
March 31, | |
| | 2022 | | 2021 | | 2022 | | 2021 | | 2023 | | 2022 | |
| Revenue related to Kite agreement: | Revenue related to Kite agreement: | | | | | | | | Revenue related to Kite agreement: | | | | |
| Recognition of license and stand-ready fee | $ | 6,296 | | | $ | 6,296 | | | $ | 18,682 | | | $ | 18,682 | | |
| Research services | 619 | | | 113 | | | 875 | | | 339 | | |
| Recognition of license fee fixed consideration | | Recognition of license fee fixed consideration | $ | 11,440 | | | $ | 6,159 | | |
| Research services variable consideration | | Research services variable consideration | 868 | | | 149 | | |
| Total | Total | $ | 6,915 | | | $ | 6,409 | | | $ | 19,557 | | | $ | 19,021 | | Total | $ | 12,308 | | | $ | 6,308 | | |
In March 2023, the Company recorded an adjustment to revenue related to a change in estimate in connection with the collaboration agreement with Kite. This adjustment was driven by a reduction in the estimated future level of the Company’s research and development services and as a result, future project costs. This resulted in an increase in proportional cumulative performance on this collaboration and an increase in revenue of $8.9 million, an increase in net income of $8.9 million, and an increase in the Company’s basic and diluted earnings per share of $0.06 and $0.05, respectively, for the three months ended March 31, 2023.
Sanofi S.A.
In January 2014, the Company entered into an exclusive worldwide collaboration and license agreement (“2014 Collaboration Agreement”) to develop therapeutics for hemoglobinopathies, focused on beta thalassemia and sickle cell disease (“SCD”). The 2014 Collaboration Agreement was originally signed with BIMA, who subsequently assigned it to Bioverativ Inc., which was later acquired by Sanofi.Sanofi S.A (“Sanofi”). Under the 2014 Collaboration Agreement, the Company was originally jointly conducting two research programs: a beta thalassemia program, which was discontinued in the third quarter of 2021, and the SCD program, which resulted in the development of SAR445136 (now known as BIVV003), a ZFN, gene-edited cell therapy product candidate for the treatment of SCD, which remains active.SCD. In December 2021, Sanofi notified the Company of its termination for convenience, effective June 28, 2022 (the “Termination Date”), of the 2014 Collaboration Agreement. A termination and transition agreement (the “Termination and Transition Agreement”) was executed by the parties on September 6, 2022.
In the SCD program, the Company and Sanofi were jointly responsible for research and development activities prior to filing of an IND, but Sanofi was responsible for subsequent worldwide clinical development, manufacturing and commercialization of licensed products developed under the agreement. Subject to the terms of the agreement, the Company had granted Sanofi an exclusive, royalty-bearing license, with the right to grant sublicenses, to use certain ZFPZF and other technology controlled by the Company for the purpose of researching, developing, manufacturing and commercializing licensed products developed under the agreement. The Company had also granted Sanofi a non-exclusive worldwide, royalty-free fully paid license with the right to grant sublicenses, under the Company’s interest in certain other intellectual property developed pursuant to the agreement. During the term of the agreement, the Company was not permitted to research, develop, manufacture or commercialize, outside of the agreement, certain gene therapy products that target genes relevant to the licensed products.
Under the agreement,2014 Collaboration Agreement, the Company received an upfront license fee of $20.0 million and was eligible to receive additional payments upon the achievement of specified clinical development, regulatory milestones, and sales milestones, as well as royalty payments for each licensed product based on net sales of such product. Sanofi was also to reimburse Sangamo for agreed upon costs incurred in connection with research and development activities conducted by Sangamo. Through the Termination Date, a total of $13.5 million has beenwas received based uponon achievement of clinical development milestones. No products have been approved and therefore no royalty fees have been or will be earned under the 2014 Collaboration Agreement.
In its termination notice to the Company, Sanofi indicated that its termination relates to Sanofi’s change in strategic direction to focus on allogeneic universal genomic medicine approaches rather than autologous personalized cell therapies. As of
the Termination Date, the 2014 Collaboration Agreement was terminated in its entirety and following the Termination Date, the Company will not be entitled to receive any further milestone payments or royalties from Sanofi. As of the Termination Date, Sanofi has no further obligations under the 2014 Collaboration Agreement to develop or to fund the development of any
collaboration research programs under the 2014 Collaboration Agreement. The licenses granted to Sanofi under the 2014 Collaboration Agreement have been terminated, and the license rights have reverted to the Company.
As part of the Termination and Transition Agreement, Sanofi granted to the Company exclusive, worldwide, fully paid, royalty-free, perpetual, irrevocable licenses, with the right to grant sublicenses through multiple tiers, to certain of its intellectual property, to develop, manufacture, have manufactured, use, sell, offer to sell, import and otherwise commercialize BIVV003, the product candidate in development under the SCD program. The Company has agreed to take on responsibilities for all clinical trials related to BIVV003, including completion of the ongoing clinical trial and the related long-term follow-up study. The Company also assumed all regulatory responsibilities related to BIVV003. Sanofi has agreed to provide post-transition assistance to the Company for up to 90 days after the Termination Date,transferred and transferred or assigned to the Company all documentation, materials and contracts with third parties related to BIVV003, and the right to use certain Sanofi-owned or leased equipment related to BIVV003.
Sanofi has also agreed to reimburse the Company for the costs of conducting the ongoing clinical trial of BIVV003 and the costs of the long-term follow-up study through December 31, 2023, up to $7.0 million. In addition, should the Company elect not to continue the development of BIVV003 past December 31, 2023, Sanofi will become obligated to reimburse the Company for the costs of the long-term follow-up study incurred after 2023, up to $5.3 million. Sanofi’s reimbursement obligations will terminate upon certain triggering events, including the Company’s entering into a contract with a third party for collaboration, partnership, sale, licensing, or divestiture of BIVV003, or if the FDA permits early closure of the clinical trial and/or the long-term follow-up study.
The Company assessed the 2014 Collaboration Agreement with Sanofi in accordance with ASC Topic 606 and concluded that Sanofi was a customer under that arrangement. The Company identified the performance obligation within this arrangement as a license to the technology combined with ongoing research services activities. The Company concluded that the license was not distinct as it did not have stand-alone value to Sanofi without the research services. As a result, the Company recognized revenue from the upfront payment and the milestones based on progress of performance of the ongoing research services. The estimation of progress towards the satisfaction of the performance obligation and project cost was reviewed quarterly and adjusted, as needed, to reflect the Company’s then-currentthen current assumptions regarding the timing of its deliverables. Related costs and expenses under these arrangements have historically approximated the revenues recognized. Sanofi’s December 2021 notice of termination of the 2014 Collaboration Agreement represented a modification that reduced the expected scope of the Company’s services and the estimated transaction price and shortened the remaining performance timeline. Consistent with this change, all services provided by the Company under the 2014 Collaboration Agreement were completed by June 28, 2022, and all amounts ultimately included in the transaction price were recognized by such date. The final transaction price of $96.3 million includesincluded the upfront license fee of $20.0 million, two milestone payments in the aggregate amount of $13.5 million and reimbursement of research costs of $62.8 million. As of September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company had ano receivable of zero and $0.6 million, respectively,or deferred revenue related to the 2014 Collaboration Agreement. Deferred revenue related to the 2014 Collaboration Agreement was zero and $1.1 million as of September 30, 2022 and December 31, 2021, respectively.
The Company concluded that Sanofi is not a customer under the Termination and Transition Agreement as Sanofi is not entitled to receive and cannot use the results of the ongoing clinical trial or the long-term follow-up study. This relationship is also not a collaboration in the scope of ASC Topic 808, Collaborative Arrangements. The Company concluded that the assets acquired from Sanofi do not represent a business, as substantially all of their value is concentrated in the acquired or re-acquired licenses to intellectual property. The Company has no obligation to repay Sanofi for its ongoing funding of the clinical trial or long-term follow-up study costs. Therefore, the Company will recognize Sanofi reimbursements as reductions ofto its research and development expense. During the three and nine months ended September 30, 2022,March 31, 2023, the Company decreased its research and development expense by $0.9$0.5 million for these reimbursements, which is included within prepaid expenses and other current assets on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2022.March 31, 2023.
Revenues recognized under the 2014 Collaboration Agreement were as follows (in thousands): | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Revenue related to Sanofi agreement: | | | | | | | |
| Recognition of upfront fee | $ | — | | | $ | (1,125) | | | $ | 677 | | | $ | (692) | |
| Research services | — | | | 1,125 | | | 2,126 | | | 2,417 | |
| Milestone achievement | — | | | (759) | | | 457 | | | (467) | |
| Total | $ | — | | | $ | (759) | | | $ | 3,260 | | | $ | 1,258 | |
In September 2021, the Company recorded an adjustment to revenue related to a change in estimate in connection with the collaboration agreement with Sanofi. This adjustment was a result of an increase in the project costs for its beta thalassemia program and the increase in project scope and the corresponding costs for its SCD program, both of which resulted in a decrease | | | | | | | | | | | | | | | |
| Three Months Ended
March 31, | | |
| 2023 | | 2022 | | | | |
| Revenue related to Sanofi agreement: | | | | | | | |
| Recognition of upfront fee | $ | — | | | $ | 311 | | | | | |
| Research services | — | | | 978 | | | | | |
| Milestone achievement | — | | | 210 | | | | | |
| Total | $ | — | | | $ | 1,499 | | | | | |
in the measure of proportional cumulative performance. This adjustment decreased revenue by $2.5 million, increased net loss by $2.5 million and increased the Company's basic and diluted net loss per share by $0.02 for the three and nine months ended September 30, 2021.
Pfizer Inc.
Giroctocogene Fitelparvovec Global Collaboration and License Agreement
In May 2017, the Company entered into an exclusive global collaboration and license agreement with Pfizer Inc. (“Pfizer”), pursuant to which it established a collaboration for the research, development and commercialization of giroctocogene fitelparvovec, its gene therapy product candidate for hemophilia A, and closely related products.
Under this agreement, the Company is responsible for conducting the Phase 1/2 clinical trial and for certain manufacturing activities for giroctocogene fitelparvovec, while Pfizer is responsible for subsequent worldwide development, manufacturing, marketing and commercialization of giroctocogene fitelparvovec. Sangamo may also collaborate in the research and development of additional AAV-based gene therapy products for hemophilia A.
Subject to the terms of the agreement, the Company granted Pfizer an exclusive worldwide royalty-bearing license, with the right to grant sublicenses, to use certain technology controlled by the Company for the purpose of developing, manufacturing and commercializing giroctocogene fitelparvovec and related products. Pfizer granted the Company a non-exclusive, worldwide, royalty-free, fully paid license, with the right to grant sublicenses, to use certain manufacturing technology developed under the agreement and controlled by Pfizer to manufacture the Company’s products that utilize the AAV delivery system. During a specified period, neither the Company nor Pfizer is permitted to clinically develop or commercialize, outside of the collaboration, certain AAV-based gene therapy products for hemophilia A.
Unless earlier terminated, the agreement has a term that continues on a per product and per country basis until the later of (i) the expiration of patent claims that cover the product in a country, (ii) the expiration of regulatory exclusivity for a product in a country, and (iii) fifteen years after the first commercial sale of a product in a country. Pfizer has the right to terminate the agreement without cause in its entirety or on a per product or per country basis. The agreement may also be terminated by either party based on an uncured material breach by the other party or the bankruptcy of the other party. Upon termination for any reason, the license granted by the Company to Pfizer to develop, manufacture and commercialize giroctocogene fitelparvovec and related products will automatically terminate. Upon termination by the Company for cause or by Pfizer in any country or countries, Pfizer will automatically grant the Company an exclusive, royalty-bearing license under certain technology controlled by Pfizer to develop, manufacture and commercialize giroctocogene fitelparvovec in the terminated country or countries.
Upon execution of the agreement, the Company received an upfront fee of $70.0 million and is eligible to receive up to $208.5 million in payments upon the achievement of specified clinical development, intellectual property and regulatory milestones and up to $266.5 million in payments upon first commercial sale milestones for giroctocogene fitelparvovec and potentially other products. The total amount of potential clinical development, intellectual property, regulatory and first commercial sale milestone payments, assuming the achievement of all specified milestones in the agreement, is up to $475.0 million, which includes up to $300.0 million for giroctocogene fitelparvovec and up to $175.0 million for other products that may be developed under the agreement, subject to reduction on account of payments made under certain licenses for third-party intellectual property. In addition, Pfizer agreed to pay the Company royalties for each potential licensed product developed under the agreement that are an escalating tiered, double-digit percentage14% - 20% of the annual worldwide net sales of such product and are subject to reduction due to patent expiration, entry of biosimilar products to the market and payment made under certain licenses for third-party intellectual property. To date, two milestones of $55.0 million in aggregate have been achieved and paid, however no products have been approved and therefore no royalty fees have been earned under the agreement.
The Company assessed the agreement with Pfizer in accordance with ASC Topic 606 and concluded that Pfizer iswas a customer. The total transaction price under this agreement was $134.0 million, which represented the upfront fee and research services fees of $79.0 million and fees related to two achieved milestones in an aggregate amount of $55.0 million. Sangamo was responsible for internal and external research costs as part of the upfront fee and had the ability to request additional reimbursement from Pfizer if certain conditions were met. None of the constrained clinical or regulatory milestones were included in the transaction price. As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestones at the time was uncertain and contingent upon future periods when the uncertainty related to the variable consideration is resolved. The Company will re-evaluate the transaction price, including its estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
The Company has identified the performance obligations within the agreement as a license to the technology and ongoing research services. The Company concluded that the license iswas not discrete as it doesdid not have stand-alone value to Pfizer apart from the research services to be performed by the Company pursuant to the agreement. As a result, the Company recognized
revenue from the upfront payment based on proportional performance of the ongoing research services through 2020, the period during which the Company performed research services. The estimation of progress towards the satisfaction of its performance obligation and project cost was reviewed quarterly and adjusted, as needed, to reflect the Company’s assumptions regarding the timing of its deliverables.
In December 2020, the Company satisfied the deliverables and research services responsibilities within the arrangement. As a result, the Company recognized the remaining deferred revenue from the upfront payment in December 2020 and no revenues have been recognized during the three and nine months ended September 30, 2022March 31, 2023 and 2021.2022.
C9ORF72 Research Collaboration and License Agreement
In December 2017, the Company entered into a separate exclusive, global collaboration and license agreement with Pfizer for the development and commercialization of potential gene therapy products that use ZFP-TFsZF-TRs to treat amyotrophic lateral sclerosis and frontotemporal lobar degeneration linked to mutations of the C9ORF72 gene. Pursuant to this agreement, the Company agreed to work with Pfizer on a research program to identify, characterize and preclinically develop ZFP-TFsZF-TRs that bind to and specifically reduce expression of the mutant form of the C9ORF72 gene.
Subject to the terms of this agreement, the Company granted Pfizer an exclusive, royalty-bearing, worldwide license under the Company’s relevant patents and know-how to develop, manufacture and commercialize gene therapy products that use resulting ZFP-TFsZF-TRs that satisfy pre-agreed criteria. During a specified period, neither the Company nor Pfizer will be permitted to research, develop, manufacture or commercialize outside of the collaboration any ZFPs that specifically bind to the C9ORF72 gene.
Unless earlier terminated, the agreement has a term that continues on a per licensed product and per country basis until the later of (i) the expiration of patent claims that cover the licensed product in a country, (ii) the expiration of regulatory exclusivity for a licensed product in a country, and (iii) 15 years after the first commercial sale of a licensed product in a major market country. Pfizer also has the right to terminate the agreement without cause in its entirety or on a per product or per country basis. The agreement may also be terminated by either party based on an uncured material breach by the other party or the bankruptcy of the other party. The agreement will also terminate if the Company is unable to identify any lead candidates for development within a specified period of time or if Pfizer elects not to advance a lead candidate beyond a certain development milestone within a specified period of time. Upon termination for any reason, the license granted by the Company to Pfizer to develop, manufacture and commercialize licensed products under the agreement will automatically terminate. Upon termination by the Company for cause or by Pfizer without cause for any licensed product or licensed products in any country or countries, the Company will have the right to negotiate with Pfizer to obtain a non-exclusive, royalty-bearing license under certain technology controlled by Pfizer to develop, manufacture and commercialize the licensed product or licensed products in the terminated country or countries.
Following termination by the Company for Pfizer’s material breach, Pfizer will not be permitted to research, develop, manufacture or commercialize ZFPs that specifically bind to the C9ORF72 gene for a period of time. Following termination by Pfizer for the Company’s material breach, the Company will not be permitted to research, develop, manufacture or commercialize ZFPs that specifically bind to the C9ORF72 gene for a period of time.
The Company received a $12.0 million upfront payment from Pfizer and is eligible to receive up to $60.0 million in development milestone payments from Pfizer contingent on the achievement of specified preclinical development, clinical development and first commercial sale milestones, and up to $90.0 million in commercial milestone payments if annual worldwide net sales of the licensed products reach specified levels. In addition, Pfizer will pay the Company royalties based on an escalating tiered, mid- to high-single digit percentageof 14% - 20% of the annual worldwide net sales of the licensed products. These royalty payments are subject to reduction due to patent expiration, entry of biosimilar products to the market and payments made under certain licenses for third-party intellectual property. Each party will be responsible for the cost of its performance of the research program. Pfizer will be operationally and financially responsible for subsequent development, manufacturing and commercialization of the licensed products. To date, a milestone of $5.0 million has been achieved and paid, however no products have been approved and therefore no royalty fees have been earned under the C9ORF72 Pfizer agreement.
The Company assessed the agreement with Pfizer in accordance with ASC Topic 606 and concluded that Pfizer was a customer. The Company concluded the total transaction price under this agreement was $17.0 million, which represented the upfront fees of $12.0 million and fees related to achievement of one milestone in the amount of $5.0 million. None of the constrained clinical or regulatory milestones were included in the transaction price. As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestones at the time was uncertain and contingent upon future periods when the uncertainty related to the variable consideration is resolved. The Company will evaluate the transaction price, including its estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
The Company had identified the performance obligations within this agreement as a license to the technology and ongoing research services. The Company concluded that the license is not discrete as it does not have stand-alone value to Pfizer apart from the services to be performed by the Company pursuant to the agreement. As a result, the Company recognized revenue from the upfront payment based on proportional performance of the ongoing research services through 2020, the period the Company performed research services.
The Company satisfied the deliverables and research services responsibilities within the arrangement in September 2020, and as a result, earned a $5.0 million milestone, which the Company recognized on a cumulative basis during the year ended
December 31, 2020. In addition, the Company recognized the remaining deferred revenue from the upfront payment in September 2020 and no revenues have been recognized during the three and nine months ended September 30, 2022March 31, 2023 and 2021.2022.
NOTE 6—IMPAIRMENT OF GOODWILL AND LONG-LIVED ASSETS
During the three months ended March 31, 2023, as a result of the sustained decline in the Company’s stock price and related market capitalization, termination of the collaboration agreements with Biogen and Novartis, and a general decline in equity values in the biotechnology industry, the Company performed an impairment assessment of goodwill, indefinite-lived intangible assets, and long-lived assets.
The Company operates as a single reporting unit based on its business and reporting structure. For goodwill, a quantitative impairment assessment was performed using a market approach, whereby the Company’s fair value of equity was compared to its carrying value. The fair value of equity was derived using both the market capitalization of the Company and an estimate of a reasonable range of values of a control premium applied to the Company’s implied business enterprise value. The control premium was estimated based upon control premiums observed in comparable market transactions. This represents a level 2 nonrecurring fair value measurement. Based on this analysis, the Company recognized a non-cash, pre-tax goodwill impairment charge of $38.1 million during the three months ended March 31, 2023. As a result, the goodwill was fully impaired as of March 31, 2023.
Before completing the goodwill impairment assessment, the Company first tested its indefinite-lived intangible assets and then its long-lived assets for impairment. The Company determined its indefinite-lived intangible assets were not impaired, as their carrying values were not in excess of their individual fair values. The Company determined all of its long-lived assets represent one asset group for purposes of long-lived asset impairment assessment. The Company concluded that the carrying value of the single asset group is not recoverable as it exceeded the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition. To allocate and recognize the impairment loss, the Company determined individual fair value of long-lived assets. The Company, with the assistance of a third-party valuation firm, applied a discounted cash flow method to estimate fair values of its leasehold improvements and right-of-use assets, including leasehold improvements in the process of construction. This represents a level 3 nonrecurring fair value measurement. Based on this analysis, the Company recognized non-cash, pre-tax long-lived asset impairment charges of $11.2 million on the right-of-use assets, $5.0 million on the related leasehold improvements, and $4.2 million on construction-in-progress, during the three months ended March 31, 2023. No impairment was recognized on the remaining long-lived assets as their carrying values were not in excess of their fair values.
NOTE 7—STOCK-BASED COMPENSATION
The following table shows total stock-based compensation expense includedrecognized in the accompanying Condensed Consolidated Statements of Operations (in thousands): | | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | Three Months Ended
March 31, | |
| | 2022 | | 2021 | | 2022 | | 2021 | | 2023 | | 2022 | |
| Research and development | Research and development | $ | 4,395 | | | $ | 4,935 | | | $ | 13,656 | | | $ | 14,645 | | Research and development | $ | 4,873 | | | $ | 4,670 | | |
| General and administrative | General and administrative | 3,398 | | | 2,938 | | | 9,746 | | | 10,235 | | General and administrative | 3,404 | | | 3,021 | | |
| Total stock-based compensation expense | Total stock-based compensation expense | $ | 7,793 | | | $ | 7,873 | | | $ | 23,402 | | | $ | 24,880 | | Total stock-based compensation expense | $ | 8,277 | | | $ | 7,691 | | |
NOTE 7—8—STOCKHOLDERS’ EQUITY
At-the-Market Offering Agreement
In August 2020, the Company entered into an Open Market Sale Agreement℠ with Jefferies LLC (“Jefferies”) with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of the Company’s common stock having an aggregate offering price of up to $150.0 million through Jefferies as the Company’s sales agent or principal. In December 2022, the Company entered into Amendment No. 2 to the Open Market Sale Agreement℠ which increased the aggregate offering price under the at-the-market offering program by an additional $175.0 million. The Company is not obligated to sell any shares under the sales agreement. During the three and nine months ended September 30, 2022,March 31, 2023, the Company sold 8,483,104 and 14,711,7703,962,430 shares of its common stock for net proceeds of approximately $42.2$9.7 million, and $66.4 million, respectively, of which approximately $0.6 million was received in October 2022April 2023 and recorded within prepaid expenses and other current assets on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2022. DuringMarch 31, 2023. No shares were sold under the sales agreement during the three and nine months ended September 30, 2021, the Company sold 202,705 and 2,007,932 sharesMarch 31, 2022.
NOTE 8—9—INCOME TAXES
The Company’s provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period. During the three and nine months ended September 30,March 31, 2023 and 2022, the Company recorded income tax expense of $0.1$0.2 million and $0.2 million, respectively. During the three and nine months ended September 30, 2021, the Company recorded income tax expense of $0.1 million and $0.4 million, respectively.
The Company continues to maintain a full valuation allowance on its U.S. federal and state net deferred tax assets and on the Sangamo France net deferred tax assets, as the Company believes it is not more likely than not that these benefits will be realized. The tax expense for the three and nine months ended September 30, 2022March 31, 2023 was primarily due to foreign income tax expense.
The Coronavirus Aid, Relief, and Economic Security Act, enacted on March 27, 2020, provided an Employee Retention Credit (“ERC”), which is a refundable payroll tax credit that encouraged businesses to keep employees on the payroll during the COVID-19 pandemic. Eligible employers could qualify for up to $5,000 of credit for each employee based on certain wages paid after March 12, 2020 and before January 1, 2021 and extended to September 30, 2021. Based on the Company’s evaluation of this provision and the significant pandemic-related impacts on the operations, the Company recognized zero and $3.0 million of ERC for the three and nine months ended September 30, 2022, respectively, within interest and other income, net in Condensed Consolidated Statement of Operations upon filing for the refund in January and April 2022. No refund has been received during the three and nine months ended September 30, 2022 and the amount has been recorded within prepaid expenses and other current assets on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2022.
On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, and became effective in 2023, with tax provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income and a 1% excise tax on share repurchases. The Inflation Reduction ActCompany has evaluated the provisions of 2022 will become effective beginning in 2023. Given its recent pronouncement, it is unclear at this time what, if any, impact the Inflation Reduction Act of 2022 willtax law and noted that the law change would not have on the Company's tax rate and financial results. Currently, the Company does not anticipate anya material impact on the Condensed Consolidated Financial Statements.
NOTE 10—SUBSEQUENT EVENTS
In April 2023, the Company announced a restructuring of operations and corresponding reduction in workforce (the “Restructuring”), designed to reduce costs and increase focus on its consolidated audited financial statementskey strategic priorities. Sangamo expects the Restructuring to result in the elimination of approximately 120 roles in the United States, or approximately 27% of its total United States workforce. The Company currently estimates that it will incur approximately $5 million to $7 million in cash-based expenses related to employee severance and notice period payments, benefits and related costs in connection with the Restructuring. The Company expects that the majority of the Restructuring charges will continuebe incurred in the second quarter of 2023 and that the execution of the Restructuring will be substantially complete by the end of the third quarter of 2024. The Company may also incur other charges or cash expenditures not currently contemplated due to evaluate its impactevents that may occur as further information becomes available.a result of, or associated with, the Restructuring.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains trend analysis, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended.Act. These forward-looking statements include, without limitation, statements containing the words “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “seeks,” “should,” “will,” and other words of similar import or the negative of those terms or expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties, estimates and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results could differ materially from those set forth in such forward-looking statements as a result of, but not limited to, the “Risk Factors” described in Part I, Item 1A our Annual Report on Form 10-K for the year ended December 31, 20212022 as filed with the Securities and Exchange Commission on February 24, 2022,23, 2023, or the 20212022 Annual Report, as supplemented by the risks described under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. You should also read the following discussion and analysis in conjunction with our Condensed Consolidated Financial Statements and accompanying notes included in this reportQuarterly Report and the Consolidated Financial Statements and accompanying notes thereto included in our 20212022 Annual Report.
Overview
We are a clinical-stage genomic medicine company committed to translating ground-breaking science into medicines that transform the lives of patients and families afflicted with serious diseases. We plan to deliver on this mission through development of our clinical and preclinical product candidates leveraging our novel science and our in-house manufacturing capabilities.
Clinical Programs Updates:Corporate Updates
•Fabry DiseaseIn March 2023, each of Biogen MA, Inc. and Biogen International GmbH, which we refer to together as Biogen, and Novartis Institutes for BioMedical Research, Inc., or Novartis, notified us of their termination for convenience of our respective collaboration agreements with them, with such terminations effective in June 2023. The notice of terminations were accounted for as a modification of the respective agreements, which, in the case of Biogen, resulted in a one-time increase in revenue of $127.1 million. In April 2023, we made the strategic decision to pause further development of the programs that were the subject of these collaborations.
•: IsaralgageneIn April 2023, we announced a restructuring of operations and a corresponding reduction in workforce, or the Restructuring, designed to reduce costs and increase focus on our three key strategic priorities of (a) our pre-clinical neurology disease epigenetic regulation portfolio, including our Nav 1.7 and prion disease programs, (b) preparations for a potential Phase 3 trial of isaralgagene civaparvovec, also known as ST-920, is our wholly-owned gene therapy product candidate for the treatment ofto treat Fabry disease, and is(c) the Phase 1/2 STEADFAST study evaluating TX200, our wholly owned autologous CAR-Treg cell therapy to treat patients receiving an HLA-A2 mismatched kidney from a living donor.
•As part of the Restructuring, we expect to significantly reduce our internal manufacturing and allogeneic research footprints in California. We expect the Restructuring to result in the elimination of approximately 120 roles in the United States, or approximately 27% of our US workforce. We estimate that we will incur approximately $5 million to $7 million in cash-based expenses related to employee severance and notice period payments, benefits and related Restructuring costs. We expect that the majority of the Restructuring charges will be incurred in the second quarter of 2023 and that the execution of the Restructuring will be substantially complete by the end of the third quarter of 2024. We may also incur other charges or cash expenditures not currently being evaluatedcontemplated due to events that may occur as a result of, or associated with, the Restructuring.
Clinical Programs Updates
Fabry Disease
•Since our last update on February 22, 2023, an additional three patients have been dosed in ourthe Phase 1/2 STAAR clinical study. Sangamo recently presented updated preliminary data from the STAAR study, at three medical conferences. Data were presented at the Society for the Studyresulting in a total of Inborn Errors20 patients dosed to date. A total of Metabolism (SSIEM) Annual Meeting in August, as of the February 14, 2022 cutoff date. Updated preliminary data as of the July 21, 2022 cutoff date were presented at the 29th Congress of the European Society of Gene & Cell Therapy, or ESGCT,20 sites are now active and National Organization for Rare Disorders, or NORD, conference in October. The updated preliminary data showed that all nine patients from the dose escalation phase exhibited sustained elevated α-Gal A activity, ranging from nearly 2-fold to 30-fold of mean normal, for up to 23 months post dosing, as of the last date of measurement. Four patients were withdrawn from enzyme replacement therapy, or ERT, and maintained significantly elevated levels of α-Gal A activity up to 28 weeks post withdrawal. Since the July 21, 2022 cutoff date, the fifth and final patientrecruiting. Progress in the dose escalation phase who started the study on ERT was withdrawn from ERT. Allcontinues with additional male and female patients withdrawn have remained off ERT. currently in screening.
•The Phase 1/2 STAAR study has transitioned into the expansion phase with the first five expansion patients dosed at the 5e13 vg/kg dose level, including the first two female patients. We have multiple patients in screening, including both maleis ongoing and female candidates. We also continue to actively planpreparations for a potential pivotalPhase 3 clinical trial actively progress. We plan to meet with the FDA on proposed Phase 3 study design in the summer and a Phase 3 trial and are engagingstart is anticipated in the second half of 2023, depending on regulatory interactions, with health authorities,dosing of the first patient advocacy groups and investigators.
•Sickle Cell Disease: BIVV003, formerly known as SAR445136, is our zinc finger nuclease, or ZFN, gene-edited autologous cell therapy product candidate forearly as the treatmentfirst part of sickle cell disease, or SCD, and is currently being evaluated in our Phase 1/2 PRECIZN-1 clinical study. In October 2022, we dosed the sixth patient2024. The completion of dosing in the Phase 1/2 study, whoexpansion phase is the second patient in the study to receive a product candidate manufactured using improved methods that have been shown in internal experiments to increase the number of long-term progenitor cells in the final product. In August 2022, the FDA granted Sangamo’s request for regenerative medicine advanced therapy, or RMAT, designation for BIVV003. RMAT designation is granted to regenerative medicine therapies intended to treat, modify, reverse, or cure a serious condition, for which preliminary clinical evidence indicates that the medicine has the potential to address an unmet medical need. We plan to present updated data, of which a summary of the accepted abstract is located below, from the Phase 1/2 PRECIZN-1 study in a poster presentation at the 64th American Society of Hematology, or ASH, Annual Meeting & Exposition taking place December 10-13, 2022 in New Orleans, Louisiana. Phase 3 study design, enabling activities and manufacturing readiness continue.
•Renal Transplant Rejection: TX200 is our wholly-owned Chimeric Antigen Receptor, or CAR, engineered regulatory T cell, or CAR-Treg, cell therapy product candidate for the prevention of immune-mediated rejection in HLA-A2 mismatched kidney transplantation from a living donor and is currently being evaluated in our Phase 1/2 STEADFAST clinical study. In September 2022, we dosed the second patient in the Phase 1/2 study. The product candidate continues
to be generally well tolerated in both patients. In October 2022, the second patient in the Phase 1/2 STEADFAST study experienced a serious adverse event, or SAE, of duodenal ileus. The patient was also noted to be COVID positive. The Principal Investigator and the Safety Monitoring Committee for the TX200 study assessed the SAE as unrelated to the TX200 treatment, and the patient has since fully recovered. Clinical activities continue to progress in preparation for patient three. We plan to provide guidance on timing of dosing of the third patient once the kidney transplant has been scheduled and we have confirmed a potential dosing date.
•Hemophilia A: Giroctocogene fitelparvovec, also known as SB-525, is a gene therapy product candidate for the treatment of moderately severe to severe hemophilia A and is the subject of our Phase 1/2 Alta study and the registrational Phase 3 AFFINE clinical trial. We are developing giroctocogene fitelparvovec with our collaborator Pfizer Inc., or Pfizer. We and Pfizer plan to present updated data, of which a summary of the accepted abstract is located below, from the Phase 1/2 Alta study in a poster presentation at ASH on December 10-13, 2022. In September 2022, we and Pfizer jointly announced that the Phase 3 AFFINE trial had re-opened recruitment following a voluntary pause and subsequent clinical hold. Trial sites resumed enrollment in September, and dosing is expected to resume shortly. All trial sites are anticipated to be active by the end of 2022,2023 and is not expected to be a pivotal readout is expected ingating factor for the first halfcommencement of 2024.
Summary of Preliminary Safety and Efficacy Results from the Phase 1/2 PRECIZN-1 Study of BIVV003
•BIVV003 is a novel therapeutic product candidate comprising autologous CD34 hematopoietic stem progenitor cells, or HSPCs, modified ex vivo by ZFNs targeting specifically the BCL11A gene erythroid-specific enhancer, or ESE, to increase endogenous fetal hemoglobin, or HbF, production in erythrocytes.
•PRECIZN-1 is an ongoing first-in-human, open label, single arm, multi-site study evaluating safety and tolerability of BIVV003 in patients (n=8; aged 18-40 years) with severe SCD across six U.S. sites.
•Eligible patients underwent mobilization and apheresis with plerixafor. Autologous HSPC, were transfected ex vivo with ZFN messenger ribonucleic acid to manufacture BIVV003. A single IV infusion was administered at least 72 hours after pre-conditioning with busulfan.
•Patients were monitored for stem cell engraftment and hematopoietic recovery, adverse events, or AEs, clinical and laboratory hemolysis markers, total hemoglobin and HbF, percentage of red blood cells containing HbF, and SCD related events.
•As of the cutoff date of May 3 2022, four patients had received BIVV003 infusions up to 125 weeks of follow-up for the longest treated patient.trial.
•A fifth patient was dosed with BIVV003 on May 4, 2022 and has engrafted. This patient received BIVV003 manufactured using an improved process that has been shown in internal experiments to increase the number of ZFN-modified long-term progenitors in the product candidate.
•Of the four patients dosed prior to the cutoff date, three have improved clinically since BIVV003 infusion through the cutoff date. For these three patients, the percent HbF levels stabilized at 30% or greater by 26 weeks after BIVV003 infusion and persisted for up to 104 weeks for the longest treated patient (2 years) (see Figure 1 below). The percentage of F cells (red blood cells that contained HbF) were sustained at 90% or greater for up to 104 weeks. Total hemoglobin levels were maintained in the range of 9.4-12.7 g/dL. The one patient whose percent HbF level stabilized at less than 20% and who did not sustain HbF levels above 10 pg per cell experienced two severe VOCs at 9- and 16-months post-infusion.
Figure 1: Total Hb and Hb fractionation over time
As of the May 3, 2022 cutoff date, BIVV003 was generally well tolerated with no infusion related reactions. AEs reported were consistent with plerixafor mobilization and busulfan myeloablative conditioning. No AEs or SAEs were reported that were assessed as related to BIVV003.
Summary of Updated Preliminary Results from•In April 2023, a patient in the Phase 1/2 Alta StudySTAAR study experienced a Grade 3 serious adverse event, or SAE, of Giroctocogene Fitelparvovec
Eleven male patients participated instroke, requiring hospitalization. The patient has since been discharged, and the study overall, with five patients inPrincipal Investigator has since determined that the 3e13-vg/kg highest dose cohort. As ofSAE was not related to the May 20, 2022 cutoff date, patients had been followed for 147 to 247 weeks, with two not having completed three years (156 weeks).
•As of the May 20, 2022 cutoff date, the most commonly reported treatment-related AEs in the highest dose cohort (3e13-vg/kg) included elevated liver enzymes and infusion-related reactions: increased alanine aminotransferase, or ALT 3/5 (60.0%), increased aspartate aminotransferase, or AST 2/5 (40.0%), pyrexia 3/5 (60.0%), and tachycardia 2/5 (40.0%).ST-920 treatment.
•Treatment-related SAEs were reported in one patient in the highest dose cohort who experienced hypotension and fever with onset approximately six hours after giroctocogene fitelparvovec infusion; the events fully resolved with treatment and did not delay post-infusion discharge the next day. ALT elevations requiring more than seven days of corticosteroid treatment were observed in four of the five patients in the highest dose cohort as of the May 20, 2022 cutoff date; elevations in ALT were managed with a tapering course of corticosteroids (median 56 days; range: 7–135 days), with maintenance of clinically meaningful levels of factor VIII, or FVIII, activity, as evidenced by a lack of bleeding events around the time of corticosteroid treatment and minimal bleeding events afterwards.
•As of the May 20, 2022 cutoff date, no patient in the study developed an inhibitor to FVIII, and there have been no thrombotic events and no hepatic masses detected.
•The three patients in the 3e13-vg/kg cohort with available data through Week 156 had mean FVIII activity maintained in the mild to normal range, as shown in the table below. Of the data available for the remaining two patients, one maintained FVIII activity levels in the mild range through Week 130 and one had FVIII activity levels below lower level of quantification (<3%) as measured with a chromogenic assay and 5.4% measured with a 1-stage assay at Week 130.Renal Transplant Rejection
•In March 2022, we dosed the 3e13-vg/kg cohort, the annualized bleeding rate, meaning the number of all bleeding episodes starting three weeks after thefirst patient in our Phase 1/2 STEADFAST study evaluating TX200. The second and third patients were dosed with their personalized TX200 cell therapies in September 2022 and April 2023, respectively. The product candidate infusion dividedcontinues to be generally well tolerated in all three patients dosed to date. Manufacturing and clinical activities for the second cohort are progressing and additional patients are in pre-screening for potential enrollment in the study. We received positive regulatory feedback for accelerated dose escalation protocol from two European agencies to date. We plan to share initial data from cohort 1 by the observation periodend of 2023.
Hemophilia A
•Dosing to support the primary analysis of the Phase 3 AFFINE trial of giroctocogene fitelparvovec, an investigational gene therapy we are developing with Pfizer Inc., or Pfizer, for patients with moderately severe to severe hemophilia A, is now complete. A pivotal readout is expected in years, was zero for the first year post-infusionhalf of 2024, with Pfizer anticipating submitting a biologics license application and 0.9 throughouta marketing authorization application, in the total durationsecond half of follow-up. In this cohort, two patients experienced a total of 12 bleeding events (six traumatic, four spontaneous, two unknown) necessitating treatment with exogenous FVIII. As of2024 if the May 20, 2022 cutoff date, no patients in this cohort have resumed prophylaxis.pivotal readout is supportive.
Table. Factor VIII Activity Levels by 1-Stage and Chromogenic Assay for the Giroctocogene Fitelparvovec 3e13-vg/kg Cohort
| | | | | | | | | | | | | | | | | | | | | | | |
| | |
Factor VIII Activity,
% Normal, Median (min, max) | Study Week |
| Assay | Week 12 | Week 24 | Week 52 | Week 78 | Week 104 | Week 130 | Week 156 |
| 1-stage clotting | 93.7
(82.7, 167.7)
| 104.8
(30.5, 212.6)
| 31.1
(12.0, 191.3)
| 57.5
(3.8, 144.2)
| 27.5
(4.1, 99.1)
| 23.3
(5.4, 164.5) | 22.9
(22.6, 129.0) |
| Chromogenic | 62.1
(51.8, 109.5)
| 70.1
(20.4, 123.8)
| 20.1
(7.8, 122.3)
| 40.1
(0.9, 114.7)
| 16.3
(0.9, 71.6)
| 12.3
(0.9, 113.2) | 12.5
(11.8, 91.1) |
| Patients, n | 5 | 5 | 4a | 4a | 5 | 4a | 3b |
(a) There was one patient each who was unable to attend visits at Weeks 52, 78, and 130. | | |
(b) Two patients had not yet reached Week 156 at the time of the data cut. | | |
| min, max = minimum, maximum | | |
| | | | | | | |
Preclinical Programs
Our preclinical development is focused in two innovative priority areas: (i) epigenetic regulation for neurological diseases and (ii) CAR-Treg cell therapies for autoimmune disorders and (ii) genome engineering for neurological diseases. Indicationsdisorders. Other indications for our preclinical programs include neurodevelopmental disorders, cancer, inflammatory bowel disease, tauopathies and neurodegenerative diseases such as amyotrophic lateral sclerosis, multiple sclerosis, cancer, ALS, and Huntington’s disease,Disease, some of which we are developing with our collaborators Biogen MA, Inc.Pfizer, Takeda Pharmaceutical Company Limited, or Takeda, and Biogen International GmbH, which we refer to together as Biogen, Novartis Institutes for BioMedical Research,Kite Pharma, Inc., or Novartis, Pfizer,Kite.
As part of the Restructuring, we made a strategic decision to increase focus on certain of our preclinical programs as one of the key areas of our business, including Nav 1.7 and Takeda Pharmaceutical Company Limited.prion disease as the cornerstones to the neurology epigenetic regulation portfolio. The Nav 1.7 pathway to potentially treat chronic neuropathic pain has been identified as our flagship program in our newly prioritized wholly owned neurology pipeline, with an investigational new drug application, or IND, submission expected in 2024. We plan to present the first data from this program in a platform presentation at the American Society for Cell and Gene Therapy 26th Annual Meeting taking place May 16-20, 2023 in Los Angeles, California. We also continue to advance our wholly owned prion disease program, with an IND submission anticipated in 2025. Identification and selection of engineered adeno-associated virus, or AAV, capsids enhanced for central nervous system delivery continues to progress.
Collaborations
Our multiple collaborations with biopharmaceutical companies bring us important financial and strategic benefits and reinforce the potential of our research and development efforts and our ZFPZF technology platform. They leverage our collaborators’ therapeutic and clinical expertise and commercial resources with the goal to bring our medicines more rapidly to
patients. We believe these collaborations reflect the value of our ZFPZF technology platform and will potentially expand the addressable markets of our product candidates. To date, we have received approximately $815.0 million in upfront licensing fees, milestone payments and proceeds from salessale of our common stock to collaborators and have the rightopportunity to earn up to $6.7$3.6 billion in potential future milestone payments from our collaborations, in addition to potential product royalties.
In-House Manufacturing
We believe that our in-house manufacturing capacity provides us a competitive advantage. We currently operate an adeno-associated virus, or AAV manufacturing facility in our Brisbane, California headquarters andheadquarters. In connection with the Restructuring, we made the decision to cease cell therapy manufacturing facilitiesin our facility in Brisbane, California and move our allogeneic cell therapy research to Valbonne, France, alongside cell therapy manufacturing already located in Valbonne, France. Our manufacturing strategy is to provide greater flexibility, quality and control to our product candidate pipeline by building a balanced and necessary capacity achieved through our in-house manufacturing and contract manufacturing organizations,organization, or CMOs, and partnerships;CMO, partnerships, investing in manufacturing processes and analytics;analytics and developing a strong supply chain.
For additional information regarding our business, see “Business” in Part I, Item 1 of the 20212022 Annual Report.
ImpactsMacroeconomic Conditions and the COVID-19 Pandemic
Our business and operations and those of our collaborators may continue to be affected by financial instability and a general decline in economic conditions in the United States and other countries caused by political instability and conflict, including the ongoing conflict between Russia and Ukraine, and economic or financial challenges caused by current and potential future bank failures or by general health crises such as the COVID-19 pandemic, which have led to market disruptions, including
significant volatility in commodity prices, credit and capital markets instability, including disruptions in access to bank deposits and lending commitments, supply chain interruptions, rising interest rates and global inflationary pressures. These macroeconomic factors could materially and adversely affect our ability to continue to operate as a going concern and other could otherwise have a material adverse effect on our business, operations, operating results and financial condition as well as the price of our common stock. For example, our ability to raise additional capital may be adversely impacted by these macroeconomic factors and we cannot be certain that we will be able to obtain financing on terms acceptable to us, or at all. Our failure to obtain adequate and timely funding will adversely affect our ability to continue as a going concern and our ability to develop our technology and products candidates.
In addition, as the global COVID-19 pandemic and its effects continue to evolve, the extent of the Ongoingimpact of the COVID-19 Pandemic
pandemic on our business, operations and development timelines and plans remains uncertain. We have experienced and continue tomay in the future experience impacts from the ongoing and evolving COVID-19 pandemic on our business and operations and could continue to experience these or potentially more severe impacts as the pandemic evolves in the United States, France, the United Kingdom and locations of our clinical studies and trials, such as the new sites for our STAAR study in Canada, Italy and Australia.operations. For example, we haveour Phase 1/2 STAAR clinical study evaluating isaralgagene civaparvovec and our STEADFAST study evaluating TX200 experienced periodic short-term disruptionsdelays in their respective timelines due to our onsite operations while addressing positive cases of COVID-19 by onsite workers and clinical trial patients and/or donors, as applicable, testing positive for COVID-19, delays in sourcing raw materials, and manufacturing and other technology transfer challenges with our operations could experience longer term disruptions in the future in the event of a significant outbreak of COVID-19 among our onsite workers or clinical trial patients. Moreover, from time to time, we have been required to reorganize and prioritize our resources to mitigate moderate COVID-19 impacts arising from travel restrictions, density restrictions and supply constraints.CMOs. If our programs encounter longer-term disruptions as a result of impacts of the COVID-19 pandemic, it could impact our ability to support our biopharmaceutical partners as contemplated in our collaboration agreements and could result in adjustments to our timelines.
Additionally, our Phase 1/2 STAAR clinical study evaluating isaralgagene civaparvovec has experienced and continues to experience delays in its timeline due in part to COVID-19 impacts and the diversion of healthcare resources to fight the pandemic. For example, we have experienced delays in recruiting, enrolling and dosing patients for this study, due in part to the hesitation of patients to travel by plane to trial sites not within driving distance and to enter medical facilities during the pandemic and also due in part to trial sites prioritizing COVID-19 clinical care over research activities such as the STAAR study. The study has also experienced delays when certain patients have decided to take the COVID-19 vaccine or tested positive for COVID-19 prior to enrollment or dosing in the study, and when certain patient candidates decided not to take the COVID-19 vaccine, which disqualified them from study participation. Moreover, we had experienced some short-term delays in sourcing the necessary raw materials to manufacture supplies for the STAAR study and in transporting clinical trial materials due to COVID-19 impacts.timelines. We estimated that these challenges set back our initial STAAR study timelines by approximately three to six months. Clinical timelines for this study could be revised again if COVID-19 impacts to our recruitment, screening, enrollment and dosing of patients and to our sourcing of raw materials for this study intensify because of vaccination delays, new COVID-19 variants or unexpected events.
In addition, our STEADFAST study evaluating TX200, our wholly-owned CAR-Treg cell therapy product candidate for the treatment of kidney transplant rejection, has experienced delays in its timeline due to COVID-19 impacts related to manufacturing and technology transfer challenges with our CMOs and due to patients and donors testing positive for COVID-19. Our timelines for this study could be adjusted if COVID-19 impacts result in additional delays.
With respect to our partnered programs, the timelines for the studies and trials managed by our collaborators are also subject to potential delay in the future if these studies and trials experience similar challenges that we have experienced and continue to experience in our STAAR and STEADFAST studies.
Going forward, we will continue to monitor the impact of COVID-19 on our operations, research commitments and clinical trials and those of our collaborators, clinical trial sites and CMOs. The magnitude of these impacts will depend, in part, on the length and severity of the COVID-19 pandemic and related government orders and restrictions, and how the pandemic limits the ability of us and our business partners to operate business in the ordinary course. Disruptions to these operations, and possibly more severe disruptions in the future that could arise due to restrictions applicable in the places we operate or our industry generally or to us and our facilities specifically, could impede our ability to conduct research in a timely manner, comply with our research obligations to our collaborators and advance the development of our therapeutic programs. These delays and disruptions could result in adverse material impacts to our business, operating results and financial condition.
We do not anticipate any material negative impact on our financial condition in 2022 as a result of the COVID-19 pandemic. We believe we are well positioned financially in the near term to execute on our wholly-owned and partnered research
and clinical programs. As of September 30, 2022, we had $350.3 million in cash, cash equivalents, and marketable securities. Although we believe we are well-capitalized currently, the effects of the evolving pandemic (along with the effects of war in Ukraine, inflation, climate change, rising interest rates and other economic uncertainty and volatility) could result in further disruption of global financial markets, impairing our ability to access capital, which could negatively affect our liquidity in the future. We do not currently anticipate any material impairments to the valuation of the financial assets or goodwill on our balance sheet as a result of the COVID-19 pandemic. We do not believe that the remote workplace arrangements we have implemented for our office-based employees have affected our financial reporting or control systems.
The extent to which the COVID-19 pandemic will impact our business, operations and financial condition, either directly or indirectly, will depend on future developments that remain highly uncertain at the present time. These developments include the ultimate duration and severity of the pandemic, the impacts of new COVID-19 variants, travel restrictions, new public health restrictions in the United States, France, the United Kingdom and other countries, business closures or business disruptions and the effectiveness and timeliness of actions taken in the United States, France, the United Kingdom and other countries to contain and treat the disease, including the effectiveness and timing of vaccination programs. The surge of new variants of the virus, including the recent Omicron variant and its subvariants, has resulted and may in the future result in the return of prior, or imposition of new, orders and restrictions. As our understanding of events evolves and additional information becomes available, we may materially change our guidance relating to our revenues, expenses and timelines for manufacturing, clinical trials and research and development.
See the section titled “Risk Factors” included in Part I, Item 1A of the 20212022 Annual Report for additional information on risks and uncertainties related to the evolving COVID-19 pandemic.
Certain Components of Results of Operations
Our revenues have consisted primarily of revenues from upfront licensing fees, reimbursements for research services, milestone achievements and research grant funding. We expect revenues to continue to fluctuate from period to period and there can be no assurance that new collaborations or partner reimbursements will continue beyond their initial terms or that we are able to meet the milestones specified in these agreements.
WeAlthough we reported net income for the three months ended March 31, 2023, we have incurred net losses since inception and expect to incur losses for at least the next several years as we continue our research and development activities. To date, we have funded our operations primarily through the issuance of equity securities and revenues from collaborations and research grants.
We expect to continue to devote substantial resources to research and development in the future and expect research and development expenses to increase in the next several years if we are successful in advancing our product candidates from research stage through clinical trials. Pursuant to the terms of our collaboration agreements with Biogen (which agreement will terminate effective June 15, 2023), Novartis (which agreement will terminate effective June 11, 2023), and Kite, Pharma, Inc.and our termination and transition agreement with Sanofi S.A., or Kite, and Novartis,Sanofi, certain expenses related to research and development activities will be reimbursed to us. The reimbursement funds to be received from Biogen, Kite, and Novartis through the end of the collaboration agreements will be recognized as revenue as the related costs are incurred and collection is reasonably assured. In this regard, following the effectiveness of the terminations of the Biogen and Novartis agreements, we will not be entitled to any further cost reimbursements. The reimbursement funds to be received from Sanofi will decrease our research and development expense.
General and administrative expenses consist primarily of salaries and personnel related expenses for executive, finance and administrative personnel, stock-based compensation expenses,expense, professional fees, allocated facilities expenses, patent prosecution expenses and other general corporate expenses. As we continue to advance our product candidates into and through the clinic, we expect the growth of our business to require increased general and administrative expenses.
Critical Accounting Policies and Estimates
The accompanying management’s discussion and analysis of our financial condition and results of operations are based upon ourOur Condensed Consolidated Financial Statements and the related disclosures which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these Condensed Consolidated Financial Statements requires us to make estimates, assumptions and judgments that affect the reported amounts in our Condensed Consolidated Financial Statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. We believe the following policies to be the most critical to an understanding of our financial condition and results of operations because they require us to make estimates, assumptions and judgments about matters that are inherently uncertain.
We believe our critical accounting policies and estimates relating to revenue recognition and valuation of long-lived assets including goodwill and intangible assets are the most significant estimates and assumptions used in the preparation of our Condensed Consolidated Financial Statements. See Note 1 – Organization, Basis of Presentation and Summary of Significant Accounting Policies in the accompanying notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
There have been no significant changes in our critical accounting policies and estimates during the three and nine months ended September 30, 2022,March 31, 2023, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of the 20212022 Annual Report.
Results of Operations for the Three and Nine Months Ended September 30,March 31, 2023 and 2022 and 2021
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| (in thousands, except percentage values) | | (in thousands, except percentage values) |
| 2022 | | 2021 | | Change | | % | | 2022 | | 2021 | | Change | | % |
| Revenues | $ | 26,460 | | | $ | 28,563 | | | $ | (2,103) | | | (7%) | | $ | 84,069 | | | $ | 82,715 | | | $ | 1,354 | | | 2% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| (in thousands, except percentage values) | | |
| 2023 | | 2022 | | Change | | % | | | | | | | | |
| Revenues | $ | 157,957 | | | $ | 28,231 | | | $ | 129,726 | | | 460% | | | | | | | | |
Total revenuesRevenues primarily consisted of revenuesamounts earned from our collaboration agreements. We anticipate revenues over the next severalin future years will be derived primarily from our collaboration agreements with Biogen, Novartis, Kite and Pfizer asPfizer. In this regard, the terminations of our collaboration agreements with Biogen and Novartis will be effective in June 2023 following which we continuewill not be entitled to recognize upfront andany further milestone payments received under such agreements over time.or royalties from either Biogen or Novartis, nor will either Biogen or Novartis have any further obligations to develop or to reimburse the costs of any of the programs subject to the Biogen and Novartis collaborations.
The decreaseincrease of $2.1$129.7 million in revenues for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021,2022, was primarily attributed to a decreaseto:
•an increase of $1.9$121.1 million in revenue relatedrelating to our collaboration agreement with Novartis, andBiogen, primarily due to the impact of a decreasecontract modification resulting from a notification of $1.6termination of the collaboration agreement, which resulted in an increase in the measure of proportional cumulative performance;
•an increase of $6.0 million in revenue related to our collaboration agreement with Biogen. These decreases were partially offset by a $1.9 million adjustment to revenue related to the collaboration agreement with Sanofi S.A., or Sanofi, during 2021, primarily due to a change in estimate regarding project costs, resulting in an adjustment to revenue under the agreement, offset by a decrease of $1.1 million in revenue due to the termination of collaboration agreement with Sanofi, and an increase of $0.5 million in revenue related to our collaboration agreement with Kite.
The increase of $1.4 million in revenues for the nine months ended September 30, 2022, compared to the same period in 2021, was primarily attributed to a $1.9 million adjustment to revenue related to the collaboration agreement with Sanofi during 2021, primarily due to a change in estimate regarding project costs, resulting in an adjustment to revenue under the agreement, offset by a decrease of $0.1 million in revenue due to the termination of collaboration agreement with Sanofi, an increase of $0.5 million in revenue relatedrelating to our collaboration agreement with Kite, primarily due to a reduction in the estimated future level of the research and development services and as a result, future project costs, which resulted in an adjustment to the measure of proportional cumulative performance;
•an increase of $0.5$2.5 million in revenue relatedrelating to our license agreement with Sigma-Aldrich Corporation;
•an increase of $0.9 million in revenue relating to our collaboration agreement with Novartis. Novartis; and
•an increase of $0.8 million in revenue relating to our license agreement with Open Monoclonal Technology, Inc. (now Ligand Pharmaceuticals Inc.).
These increases were partially offset by a decrease of $1.5 million in revenue relatedrelating to our collaboration agreement with Biogen.Sanofi, due to the termination of collaboration agreement in June 2022.
Operating expenses | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended March 31, | |
| | (in thousands, except percentage values) | | (in thousands, except percentage values) | | (in thousands, except percentage values) | |
| | 2022 | | 2021 | | Change | | % | | 2022 | | 2021 | | Change | | % | | 2023 | | 2022 | | Change | | % | |
| Operating expenses: | Operating expenses: | | | | | | | | | | | | | | | | Operating expenses: | | | | | | | | |
| Research and development | Research and development | $ | 65,116 | | | $ | 62,498 | | | $ | 2,618 | | | 4% | | $ | 183,719 | | | $ | 179,018 | | | $ | 4,701 | | | 3% | Research and development | $ | 63,216 | | | $ | 58,584 | | | $ | 4,632 | | | 8% | |
| General and administrative | General and administrative | 16,238 | | | 14,501 | | | 1,737 | | | 12% | | 46,239 | | | 47,135 | | | (896) | | | (2%) | General and administrative | 18,136 | | | 14,908 | | | 3,228 | | | 22% | |
| Impairment of goodwill | | Impairment of goodwill | 38,138 | | | — | | | 38,138 | | | 100% | |
| Impairment of long-lived assets | | Impairment of long-lived assets | 20,433 | | | — | | | 20,433 | | | 100% | |
| Total operating expenses | Total operating expenses | $ | 81,354 | | | $ | 76,999 | | | $ | 4,355 | | | 6% | | $ | 229,958 | | | $ | 226,153 | | | $ | 3,805 | | | 2% | Total operating expenses | $ | 139,923 | | | $ | 73,492 | | | $ | 66,431 | | | 90% | |
Research and Development Expenses
Research and development expenses consisted primarily of compensation related expenses, including stock-based compensation, laboratory supplies, preclinical and clinical studies, costs,manufacturing clinical supply, manufacturing costs, contracted research, and allocated facilities and information technology expenses.
The increase of $2.6$4.6 million in research and development expenses for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021,2022, was primarily attributable to higher facilitiesheadcount and information technologyinfrastructure related costs, of $2.7 million driven by overall cost increases andcoupled with higher external services to progress made on projects resulting in reassignment of additional space to our research and development departments, an increase of $0.8 million in compensation and other personnel costs as a result of increased headcount to support our programs, and an increase of $0.5 million in travel and entertainment expenses. These increases were partially offset by a decrease of $0.4 million in preclinical, clinical and lab supply expenses due to the timing of certain research and development activities, and $0.9 million in reimbursement of certain research and development expenses by Sanofi.trials. Stock-based compensation expense included in research and development expenses was $4.4$4.9 million and $4.9$4.7 million for the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively.
The increase of $4.7 million in research and development expenses for the nine months ended September 30, 2022, compared to the same period in 2021, was primarily driven by higher facilities and information technology costs of $7.8 million driven by overall cost increases and progress made on projects resulting in reassignment of additional space to our research and development departments, an increase of $0.9 million in travel and entertainment expenses, and an increase of $0.8 million in compensation and other personnel costs as a result of increased headcount to support our programs. These increases were partially offset by a decrease of $3.7 million in preclinical, clinical and lab supply expenses due to the timing of certain research and development activities, and $0.9 million in reimbursement of certain research and development expenses by Sanofi. Stock-based
compensation expense included in research and development expenses was $13.7 million and $14.6 million for the nine months ended September 30, 2022 and 2021, respectively.
We expect to continue to devote substantial resources to research and development in the futurefuture. While we anticipate that our research and development expenses will decrease in the near-term in connection with the Restructuring, we ultimately expect research and development expenses to increase in the next several years if we are successful in advancing our clinical programs and if we are able to progress our earlier stage product candidates into clinical trials.
The length of time required to complete our development programs and our development costs for those programs may be impacted by the scope and timing of enrollment in clinical trials for our product candidates, our decisions to pursue development programs in other therapeutic areas, and whether we pursue development of our product candidates with a partner or collaborator or independently. For example, our product candidates are being developed in multiple therapeutic areas, and we do not yet know how many of those therapeutic areas we will continue to pursue. In this regard, in connection with the Restructuring, we have paused further development of certain pre-clinical programs following conclusion of collaborations with Biogen and Novartis. Furthermore, the scope and number of clinical trials required to obtain regulatory approval for each pursued therapeutic area is subject to the input of the applicable regulatory authorities, and we have not yet sought such input for all potential therapeutic areas that we may elect to pursue, and even after having given such input, applicable regulatory authorities may subsequently require additional clinical studies prior to granting regulatory approval based on new data generated by us or other companies, or for other reasons outside of our control. As a condition to any regulatory approval, we may also be subject to post-marketing development commitments, including additional clinical trial requirements. As a result of the uncertainties discussed above, we are unable to determine the duration of or complete costs associated with our development programs.
Our potential therapeutic products are subject to a lengthy and uncertain regulatory process that may not result in our receipt of any necessary regulatory approvals. Failure to receive the necessary regulatory approvals would prevent us from commercializing the product candidates affected. In addition, clinical trials of our product candidates may fail to demonstrate safety and efficacy, which could prevent or significantly delay regulatory approval. A discussion of the risks and uncertainties with respect to our research and development activities, including completing the development of our product candidates, and the consequences to our business, financial position and growth prospects can be found in “Risk Factors” in Part I, Item 1A of the 20212022 Annual Report, as supplemented by the risks described under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.
General and Administrative Expenses
General and administrative expenses consist primarily of compensation related expenses including stock-based compensation for executive, legal, finance and administrative personnel, professional fees, facilities and information technology expenses, and other general corporate expenses.
The increase of $1.7$3.2 million in general and administrative expenses for the three months ended September 30, 2022,March 31, 2023, compared to the same period in 2021,2022, was primarily driven by an increase of $2.1$2.5 million in compensation and other personnel costs,Biogen contract cost asset amortization primarily due to a change in estimate driven by a notification of termination of the collaboration agreement which resulted in increase in the measure of proportional cumulative performance, and an increase of $1.0 million in legalcompensation and professional fees. These increases were partially offset by a decrease
other personnel costs. Stock-based compensation expense included in general and administrative expenses was $3.4 million and $2.9$3.0 million for the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively.
The decrease of $0.9 million inWhile we anticipate that our general and administrative expenses forwill decrease modestly in the nine months ended September 30, 2022, compared tonear-term in connection with the same period in 2021, was primarily driven by a decrease of $4.3 million in allocated costs attributable to progress made on projects resulting in reassignment of additional space to our research and development departments. This decrease was partially offset by an increase of $3.4 million in compensation and other personnel costs, legal and professional fees, and travel and entertainment expenses. Stock-based compensation expense included in general and administrative expenses was $9.7 million and $10.2 million for the nine months ended September 30, 2022 and 2021, respectively.
AsRestructuring, as we continue to build out our product portfolio and advance our product candidates into the clinic, we expect higher general and administrative expenses to support the growth of the business.
Impairment of Goodwill and Long-Lived Assets
In March 2023, we concluded our goodwill and certain long-lived assets were impaired due to a sustained decline in our stock price and related market capitalization, termination of the collaboration agreements with Biogen and Novartis, and a general decline in equity values in the biotechnology industry. Based on this analysis, we recognized a non-cash, pre-tax goodwill impairment charge of $38.1 million and long-lived asset impairment charge of $20.4 million during the three months ended March 31, 2023. For more information see Note 6 – Impairment of Goodwilland Long-Lived Assets in the accompanying notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Interest and other income, net
Interest and other income, net increased by $0.9was $3.3 million and $1.3 million for the three months ended September 30,March 31, 2023 and 2022, respectively. The increase of $2.0 million for the three months ended March 31, 2023, compared to the same period in 2021,2022, was primarily driven by an increase of $1.2$2.1 million in interest income reflecting increases in market interest rates and a decrease in interest expense of $0.2 million related to dissolution of the repayment obligation of a grant from California Institute for Regenerative Medicine associated with the discontinuation of the ST-400 program in 2021. These increases were partially offset by a decrease of $0.5$0.7 million related to fluctuations in foreign currency exchange rates.
Interest and other income, net, increased by $2.7 million for the nine months ended September 30, 2022, compared to the same period in 2021, as we benefited from $3.0 million of Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act, an increase of $1.4 million in interest income reflecting increase in market interest rates, and a decrease
in interest expense of $0.6 million related to dissolution of the repayment obligation of a grant from California Institute for Regenerative Medicine associated with the discontinuation of the ST-400 program in 2021. These increases were partially offset by a $0.7 million decrease of $2.4 million related to fluctuations in foreign currency exchange rates.research tax credits and employee retention credit.
Liquidity and Capital Resources
Liquidity
Since inception, we have incurred significant net losses, and we have funded our operations primarily through the issuance of equity securities, payments from corporate collaborators and strategic partners and research grants.
As of September 30, 2022,March 31, 2023, we had cash, cash equivalents, and marketable securities totaling $350.3$241.0 million, compared to $464.7$307.5 million as of December 31, 2021.2022. Our most significant use of capital during the quarter was for employee compensation and external research and development expenses, includingsuch as manufacturing, clinical trials and preclinical activity related to our therapeutic programs. Our cash and investment balances are held in a variety of interest-bearing instruments, including U.S. government-sponsored entity debt securities, commercial paper securities, money market funds, corporate debt securities, asset-backed securities and certificates of deposit. Cash in excess of immediate requirements is invested in accordance with our investment policy with a view toward capital preservation and liquidity.
In August 2020, we entered into an Open Market Sale Agreement℠, or the sales agreement, with Jefferies LLC, providing for the sale of up to $150.0 million of our common stock from time to time in “at-the-market”‘at-the-market’ offerings under an existing shelf registration statement. In December 2022, we entered into Amendment No. 2 to the Open Market Sale Agreement℠ which increased the aggregate offering price under the sales agreement by an additional $175.0 million. Approximately $200.0 million remained available under the sales agreement as of March 31, 2023. During the ninethree months ended September 30, 2022,March 31, 2023, we sold 14,711,7703,962,430 shares of our common stock under the sales agreement for net proceeds of approximately $66.4$9.7 million, of which approximately $0.6 million was received in October 2022April 2023 and recorded within prepaid expenses and other current assets on our Condensed Consolidated Balance Sheet as of September 30, 2022. SubsequentlyMarch 31, 2023.
Under Accounting Standards Codification, or ASC, Topic 205-40, Presentation of Financial Statements—Going Concern, we have the responsibility to evaluate whether conditions and/or events could raise substantial doubt about our ability to meet our future financial obligations as they become due within twelve months after the date that the Condensed Consolidated Financial Statements included in October,this Quarterly Report on Form 10-Q are issued. We have identified several actions, including cost reduction measures that already have been initiated or that would be initiated in a timely manner, to address our liquidity needs, as follows:
•Deferral and reprioritization of certain research and development programs that would involve reduced program and headcount spend;
•Reduction in force that would be intended to extend the cash runway necessary to fund operations;
•Pause on any new hiring and reduction in ancillary expenses such as travel and recruitment expenses; and
•Reduction in non-critical capital and operating expenditures including additional equipment, lab improvements, efficiency projects, and business support spend.
In this regard, in April 2023, we sold 1,921,594 shares of our common stock underannounced the sales agreement for net proceedsRestructuring, including a reduction in force that we expect to result in the elimination of approximately $8.7 million.
While120 roles in the United States. In addition, as part of the Restructuring, we expect to significantly reduce our rateinternal manufacturing and allogeneic research footprints in California. See “—Corporate Update” above for additional information.
We believe management’s plans, as described above, sufficiently alleviate the risk of cash usagesubstantial doubt about our ability to increase in the future, in particular to support our product development endeavors, we currently believe that our available cash, cash equivalents, and marketable securities and expected revenues from collaborations and strategic partnerships will be adequate to fund our currently planned operations throughcontinue as a going concern for at least the next 12twelve months from the date our Condensed Consolidated Financial Statementsthat the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are issued. We make assumptions about the probability that management's plans will be effectively implemented and alleviate substantial doubt and our ability to continue as a going concern. However, such assumptions are inherently uncertain and actual results could differ materially from those estimates. In this regard, we could use our available capital resources sooner than we currently expect and changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.
We will be required to raise substantial additional capital to fund our operations and support our research and development endeavors. In this regard, we are actively seeking substantial additional capital, including through public or private equity or debt financings, royalty financings or other sources, such as strategic collaborations. However, additional capital may not be available to us, on terms that are acceptable or at all. If adequate funds are not available to us on a timely basis, or at all, we will be required to take additional actions to address our liquidity needs, including additional cost reduction measures such as further reducing operating expenses and delaying, reducing the scope of, discontinuing or altering our research and development activities, which could have a material adverse effect on our business. While we expect that the majority of the Restructuring charges will be incurred in the second quarter of 2023 and that the execution of the Restructuring will be substantially complete by the end of the third quarter of 2024, we may also incur other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the Restructuring. However, we may not achieve the expected benefits of these cost reduction measures and other cost reduction plans on the anticipated timeline, or at all, which could otherwise accelerate our liquidity needs and could force us to further curtail or suspend our operations. Moreover, we rely in part on our collaboration partners to provide funding for and otherwise advance our pre-clinical and clinical programs. However, in June 2022, our collaboration agreement with Sanofi terminated, and in March 2023, Biogen and Novartis notified us of their respective terminations for convenience of our collaboration agreements with them effective in June 2023. While we may identify new collaboration partners who can progress some of the programs that were the subject of these collaborations, we may not be successful in doing so in a timely manner, on acceptable terms or at all, and we may otherwise fail to raise sufficient additional capital in order to progress these programs ourselves or we may determine that for internal resource allocation purposes or for other reasons to abandon development of these programs. In any event, we would require substantial additional funding in order to progress the programs that were the subject of these collaborations.
If we raise additional capital through public or private equity offerings, including sales pursuant to our at-the-market offering program with Jefferies LLC, the ownership interest of our existing stockholders will be diluted, and such dilution may be substantial, and the terms of any new equity securities may have a preference over, and include rights superior to, our common stock. If we raise additional collaborative agreements and/capital through royalty financings or the sale ofother collaborations, strategic alliances or licensing arrangements with third parties, we may need to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable. If we raise additional equity orcapital through debt financing, we may be subject to fundspecified financial covenants or covenants limiting or restricting our future needs beyond the next 12 months. During this periodability to take specific actions, such as incurring additional debt, making capital expenditures or pursuing certain transactions, any of uncertainty and volatility, we will continuewhich could restrict our ability to monitorcommercialize our liquidity.product candidates or operate as a business.
Cash Flows
Operating activities
Net cash used in operating activities was $166.6$66.3 million for the ninethree months ended September 30, 2022,March 31, 2023, primarily reflecting our net lossincome of $140.3$21.1 million, adjusted for a non-cash goodwill and long-lived asset impairment charges of $38.1 million and $20.4 million, respectively, a decrease in deferred revenues of $65.0 million, an increase in prepaid expenses and other assets by $5.8$6.2 million, and $12.8 million of non-cash expenses related to stock-based compensation, depreciation and amortization, amortization of premium on marketable securities, and amortization of operating lease right-of-use assets. These increases were offset by a decrease in deferred revenues of $149.8 million mainly attributed to the impact of termination related contract modification for our collaboration agreement with Biogen and change in estimate for our collaboration agreement with Kite, a decrease in accrued compensation and employee benefits by $8.6 million mainly attributed to bonus pay-outs, an increase in accounts receivable by $3.3 million, a decrease in accounts payable and other accrued liabilities by $1.9 million, and a decrease in lease liabilities by $3.3$1.2 million.
Net cash used in operating activities was $59.0 million for the three months ended March 31, 2022, primarily reflecting our net loss of $44.0 million, a decrease in deferred revenues of $21.0 million, a decrease in accrued compensation and employee
benefits by $8.3 million mainly attributed to bonus pay-outs, a decrease in lease liabilities by $1.0 million, and an increase in accounts receivable by $0.9 million. These decreases were partially offset by $38.2$12.8 million of non-cash expenses related to stock-based compensation, depreciation and amortization, amortization of premium on marketable securities, and amortization of operating lease right-of-use assets and a $9.4$3.6 million increase in accounts payable and other accrued liabilities.
Net cash used in operating activities was $180.5 million for the nine months ended September 30, 2021, primarily reflecting our net loss of $140.8 million, a decrease in deferred revenues of $62.3 million, an increase in prepaid expenses and other assets by $6.5 million, a decrease in accounts payable and other accrued liabilities by $4.7 million, a decrease in long term portion of lease liabilities by $3.2 million, an increase in accounts receivable by $2.7 million, and a decrease in accrued compensation and employee benefits by $1.9 million. These decreases were partially offset by $40.1 million of non-cash expenses related to stock-based compensation, depreciation and amortization, amortization of premium (discount) on marketable securities, and amortization and other changes in operating lease right-of-use assets.
Investing activities
Net cash provided by investing activities was $16.7$35.7 million for the ninethree months ended September 30, 2022,March 31, 2023, related to maturities of marketable securities of $255.0$82.2 million, partially offset by purchases of marketable securities of $225.6 million, and $12.7 million from purchases of property and equipment.
Net cash provided by investing activities for the nine months ended September 30, 2021 was $195.6 million, mostly related to maturities of marketable securities of $509.6 million and sale of marketable securities of $6.9 million, partially offset by purchases of marketable securities of $300.4$36.2 million, and purchases of property and equipment of $20.4$10.2 million.
marketable securities, partially offset by $2.8 million from purchases of property and equipment. Financing activities
Net cash provided by financing activities was $65.1$8.0 million for the ninethree months ended September 30, 2022,March 31, 2023, mostly related to $67.5$9.4 million of proceeds from the at-the-market offering, net of offering expenses of $1.7 million, and proceeds from purchases of common stock under the employee stock purchase plan of $1.1$0.3 million, partially offset by taxes paid related to net share settlement of equity awards of $2.0$1.1 million.
Net cash provided byused in financing activities was $30.7$1.6 million for the ninethree months ended September 30, 2021,March 31, 2022, mostly related to $27.9 million of proceeds from the at-the-market offering, net of offering expenses of $0.8 million, and proceeds from the exercise of stock options and purchases under the employee stock purchase plan of $6.6 million, partially offset by taxes paid related to net share settlement of equity awards of $3.0$1.6 million.
Operating Capital and Capital Expenditure Requirements
We anticipate continuing to incur operating losses for at least the next several years. Although we believe we are well capitalized currently,years and need to raise substantial additional capital. The effects of the current macroeconomic environment, including the COVID-19 pandemic, the effects of the ongoing COVID-19 pandemic, war in Ukraine, financial and liquidity challenges associated with current and potential future bank failures, inflation, climate change, rising interest rates and other economic uncertainty and volatility, couldhas resulted and may continue to result in significant disruption of global financial markets, impairingwhich could impair our ability to access capital whichon terms that are acceptable or at all, and in turn could in the future negatively affect our liquidity.liquidity and our ability to continue to operate as a going concern. Future capital requirements beyond the next 12 months will be substantial, and we will need to raise substantial additional capital to fund the development, manufacturing and potential commercialization of our product candidatescandidates. In this regard, we are actively seeking substantial additional capital, including through additional collaboration agreements and/public or private equity or debt financing. In addition,financings, royalty financings or other sources, such as strategic collaborations. However, additional capital may not be available to us, on terms that are acceptable or at all. If adequate funds are not available to us on a timely basis, or at all, we will be required to take additional actions to address our liquidity needs, including additional cost reduction measures such as further reducing operating expenses and delaying, reducing the scope of, discontinuing or altering our research and development activities, which could have a material adverse effect on our business.
As we focus our efforts on proprietary human therapeutics, we will need to seek FDA approvals of our product candidates, a process that could cost in excess of hundreds of millions of dollars per product. We regularly consider fund-raising opportunities and may continue to decide, from time to time, to raise additional capital based on various factors, including market conditions and our plans of operation. Additional capital may not be available on terms acceptable to us, or at all. If adequate funds are not available, or if the terms of potential funding sources are unfavorable, our business and our ability to advance our product candidate pipeline would be harmed. Furthermore, any sales of additional equity securities, including additional sales pursuant to our at-the-market offering program, may result in dilution to our stockholders, and any debt financing may include covenants that restrict our business.
Our future capital requirements will depend on many forward-looking factors, including the following:
•the initiation, progress, timing and completion of clinical trials for our product candidates and potential product candidates;
•the outcome, timing and cost of regulatory approvals;
•the success of our collaboration agreements;
•delays that may be caused by changing regulatory requirements;
•the number of product candidates that we pursue;
•the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims;
•the timing and terms of future in-licensing and out-licensing transactions;
•the cost and timing of establishing sales, marketing, manufacturing and distribution capabilities;
•the cost of procuring clinical and commercial supplies of our product candidates;
•the extent to which we acquire or invest in businesses, products or technologies, including the costs associated with such acquisitions and investments; and
•the costs of potential disputes and litigation.
Contractual Obligations
Our future minimum contractual obligations as of December 31, 20212022 were reported in the 20212022 Annual Report. During the ninethree months ended September 30, 2022,March 31, 2023, there have been no other material changes outside the ordinary course of our business from the contractual obligations previously disclosed in our 20212022 Annual Report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk relates to our cash, cash equivalents, and marketable securities. The goals of our investment policy are preservation of capital, fulfillment of liquidity needs and capturing a market rate of return based on our investment policy parameters and market conditions. We select investments that maximize interest income to the extent possible within these
guidelines. To achieve our goals, we maintain a portfolio of cash equivalents and investments in securities of high credit quality and with varying maturities to match projected cash needs.
The securities in our investment portfolio are not leveraged and are classified as available-for-sale. The majority of these available-for-sale securities are short-term in nature and subject to minimal interest rate risk. Our investments currently consist of U.S. government-sponsored entity debt securities, commercial paper securities, corporate debt securities, asset-backed securities and certificates of deposit. Our investment policy, approved by our Board of Directors, limits the amount we may invest in any one type of investment issuer, thereby reducing credit risk concentrations. All investments are carried at market value, which approximates cost. We do not use derivative financial instruments in our investment portfolio. Our market risks at September 30, 2022March 31, 2023 have not changed materially from those discussed in Item 7A of our 20212022 Annual Report.
Foreign Currency Exchange Risk
We have operations in the United States as well as in Europe. The functional currency of each foreign subsidiary is the local currency. We are exposed to foreign currency risk, primarily through operations of our subsidiaries in Europe which conduct business primarily in Euros. We record gains and losses within our stockholders’ equity due to the translation of our subsidiaries’ financial statements into U.S. dollars. Our foreign currency exchange risk at September 30, 2022March 31, 2023 has not changed materially from that discussed in Item 7A of our 20212022 Annual Report.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision of our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of September 30, 2022.March 31, 2023. Based on that evaluation, as of September 30, 2022,March 31, 2023, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
Inherent Limitations on Controls and Procedures
Our management, including the principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures and our internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can only provide reasonable assurances that the objectives of the control system are met. The design of a control system reflects resource constraints; the benefits of controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, for our company have been or will be detected. As these inherent limitations are known features of the disclosure and financial reporting processes, it is possible to design into the processes safeguards to reduce, though not eliminate, these risks. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. While our disclosure controls and procedures and our internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives, there can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the
policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2022March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not party to any material pending legal proceedings. From time to time, we may be involved in legal proceedings arising in the ordinary course of business.
ITEM 1A. RISK FACTORS
Below we are providing, in supplemental form, changes to our risk factors from those previously disclosed in Part I, Item 1A of the 20212022 Annual Report. Our risk factors disclosed in Part I, Item 1A of the 20212022 Annual Report provide additional discussion about these supplemental risks and we encourage you to read and carefully consider the risk factors disclosed in Part I, Item 1A of the 20212022 Annual Report for a more complete understanding of the risks and uncertainties material to our business.
We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on other programs or product candidates that may be more profitable or for which there is a greater likelihood of success.
We have limited resources and may forego or delay pursuit of certain research programs or product candidates that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities or pursue collaborations rather than retain sole responsibility for development. Our current and future research and development programs for product candidates may not yield any commercially viable products. The evaluation of the commercial potential or target market for a particular product candidate is forward-looking and based upon assumptions involving, for example and not limited to, market evolution, advances in disease standard of care, competition and reimbursement. This reliance on assumptions means that, if our assumptions prove to be inaccurate or incomplete, we may pursue opportunities that end up having a number of competitors that are more advanced than our product candidates, or we may relinquish valuable rights to a product candidate through strategic collaboration, licensing or other royalty arrangements in cases where it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. For example, we recently made the strategic decision to halt further material investments in the BIVV003 program beyond completion of the Phase 1/2 PRECIZN-1 study in order to prioritize deployment of resources to our Fabry and TX200 programs. While we have launched a search for a collaboration partner who can progress this program to a potential Phase 3 trial, we may not be able to identify, qualify and enroll sufficient patients for our clinical trials or complete our clinical trialssuccessful in doing so in a timely manner, which could delay or prevent us from proceeding with the development of our product candidates.
Identifying, qualifying and enrolling patients in clinical trials of our product candidates, and completing these clinical trials, is critical to our success. Patient enrollment and trial completion is affected by factors including:
•size of the patient population and process for identifying patients;
•design of the trial protocol;
•eligibility and exclusion criteria;
•perceived risks and benefits of the product candidate under study;
•perceived risks and benefits of genomic approaches to treatment of diseases;
•availability of competing therapies and clinical trials;
•potential additional delays related to the evolving COVID-19 global pandemic and the diversion of healthcare resources to fight the pandemic, including the decision of certain patients to take COVID-19 vaccines, certain patients testing positive for COVID-19 prior to enrolling or dosing in the study, and certain patient candidates being disqualified from study participation because they would not take the COVID-19 vaccine;
•delays or interruptions related to voluntary pauses of our clinical trials or those of our collaborators, such as the prior voluntary pause in enrolling and dosing additional patients in the Phase 3 AFFINE trial of giroctocogene fitelparvovec, which pause has since been lifted, and the activation of trial sites;
•the imposition of clinical holds by regulatory authorities on our clinical trials or those of our collaborators, such as the prior clinical hold imposed by the FDA on the Phase 3 AFFINE trial of giroctocogene fitelparvovec, which hold has since been lifted, and the potential inability of Sangamo and our collaborators to lift clinical holds imposed by regulatory authorities in a timely manner or on acceptable terms or at all;
•delays or difficultiesall, and as a result, we could miss valuable opportunities to capitalize on the potential of the BIVV003 program. Likewise, in March 2023, Biogen and Novartis notified us of their respective terminations for convenience of our collaboration agreements with them, and in April 2023, we made the strategic decision to pause further development of the programs that were the subject of these collaborations. While we may experience in enrolling and dosing additional patients in our Phase 1/2 PRECIZN-1 study now that we have completed the transition back to Sangamoidentify new collaboration partners who can progress some of the rights and obligationsprograms that were the subject of Sanofi under our former collaboration agreement;
•severity of the disease under investigation;
•availability of genetic testing for potential patients;
•proximity and availability of clinical trial sites for prospective patients;
•required and desired characteristics of patients;
•ability to obtain and maintain patient consent;
•risk that enrolled patients will drop out before completion of the trial;
•patient referral practices of physicians; and
•ability to monitor patients adequately during and after treatment.
The timing of our clinical trials depends on our ability to recruit patients to participate as well as completion of required follow-up periods. There are also a number of other product candidatesthese collaborations, we may not be successful in development by our competitors, who compete for the same limited patient populations. If we are not able to enroll the necessary number of patientsdoing so in a timely manner, we may not be
able to complete our clinical trials on our desired timelinesacceptable terms or at all, whichand we may otherwise fail to raise sufficient additional capital in order to progress these programs ourselves or we may determine that for internal resource allocation purposes or for other reasons to abandon development of these programs. As a result, we could negatively impactmiss valuable opportunities to capitalize on the competitive position and commercial viabilitypotential of our product candidates or delay or reduce the product revenues, milestone payments or royalty payments we expectprograms. We may also allocate internal resources to earn from our product candidates. For example, we have experienced delays and challenges in recruiting, screening, enrolling and dosing patients for our Phase 1/2 STAAR clinical study evaluating isaralgagene civaparvovec, our wholly-owned gene therapya product candidate for the treatment of Fabry disease, due to challenges related to the COVID-19 pandemic, patients testing positive for COVID-19, patients reconsidering their participation in the study and the limited number of screening sites, among other reasons. Our Phase 1/2 STEADFAST clinical study evaluating TX200 has experienced similar delays and challenges. In addition, we and Pfizer also announced that some of the patients treated in the Phase 3 AFFINE trial of giroctocogene fitelparvovec have experienced FVIII activity greater than 150% following treatment, and that Pfizer decided to voluntarily pause screening and dosing of additional patients in this trial to implement a proposed protocol amendment intended to provide guidelines for the clinical management of elevated FVIII levels. Subsequent to the voluntary pause, the FDA put this trial on clinical hold and then in March 2022, the FDA lifted the clinical hold. While in September 2022 the voluntary pause initiated by Pfizer was lifted and the trial re-opened recruitment and resumed enrollment, and we expect dosing to resume shortly, we cannot assure you that the dosing of all remaining patients in the trial will resume or be completed in a timely manner, or at all,therapeutic area in which it would have been more advantageous to enter into a collaboration or that the presentation of data from such trial will be published indoes not prove to have viable commercial opportunities. Any failure to use our financial and human resources efficiently could harm our business and operations.
Unfavorable global economic conditions could have a timely manner, if at all, or that all trial sites will become active in a timely manner, or at all.
Continued delays or additional pauses to the Phase 3 AFFINE trial could negativelynegative impact the projected timelines for conducting and completing the trial and seeking regulatory approvals for giroctocogene fitelparvovec,on our operations, which could in turn materially and adversely affect giroctocogene fitelparvovec’s competitive positionour ability to continue to operate as a going concern and commercial viability and therefore our business, prospects and market price of our common stock.
In addition, if fewer patients are willing to participate in our clinical trials because of negative publicity from adverse events related to genomic medicines, competitive clinical trials for similar patient populations or for other reasons, the timelines for conducting clinical trials of our product candidates and presenting clinical data may be delayed. These delays could result in increased costs, limitation or termination of clinical trials, and delays in product development timelines. If we are forced to expand to additional jurisdictions to address these challenges, it could impose additional costs, delays and risks. If we are not successful in conducting our clinical trials as planned, it wouldotherwise have ana material adverse effect on our business, financial condition, results of operations, prospects and market price of our common stock.
Unfavorable globalFinancial instability and a general decline in economic conditions in the United States and other countries caused by political instability and conflict, including as a result of the ongoing military actionconflict between Russia and Ukraine, and economic or financial challenges caused by Russiacurrent and potential future bank failures or by general health crises such as the COVID-19 pandemic, have led to market disruptions, including significant volatility in Ukraine, could have a negative impact on our operations, whichcommodity prices, credit and capital markets instability, including disruptions in access to bank deposits and lending commitments, supply chain interruptions, rising interest rates and global inflationary pressures. These macroeconomic factors could materially and adversely affect our business, financial condition, results of operations, prospects and market price of our common stock.
On February 24, 2022, Russian forces launched significant military action against Ukraine, and sustained conflict and disruption in the region is possible. The impactability to Ukrainecontinue to operate as well as actions taken by other countries, including new and stricter sanctions imposed by Canada, the United Kingdom, the European Union, the United States.a going concern and other countries and companies and organizations against officials, individuals, regions, and industries in Russia and Ukraine, and actions taken by Russia in response to such sanctions, and responses of countries and political bodies to such sanctions, tensions, and military actions and the potential for more widespread conflict,could otherwise have resulted in supply chain disruptions, and resulting increases in inflation, financial market volatility and capital markets disruption, potentially increasing in magnitude, and such effectsa material adverse effect on the global economy and financial markets could affect our business, operations, operating results and financial condition as well as the price of our common stockstock. For example, the recent closures of Silicon Valley Bank, or SVB, Signature Bank and First Republic Bank have resulted in broader financial institution liquidity risk and concerns. Although we were able to access all of the funds we had in deposit with SVB and intend to migrate all banking services previously provided by SVB to alternative global banking providers, future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages. The failure of any bank in which we deposit our funds could reduce the amount of cash we have available for our operations or delay our ability to access such funds. Any such failure
may increase the possibility of a sustained deterioration of financial market liquidity, or illiquidity at clearing, cash management and/or custodial financial institutions. In the event we have a commercial relationship with a bank that has failed or is otherwise distressed, we may experience delays or other issues in meeting our financial obligations. If other banks and financial institutions fail or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our cash and cash equivalents and investments may be threatened and our ability to raise additional capital when needed could be substantially impaired, which could have a material adverse effect on acceptable terms.our business, operations, operating results and financial condition as well as the price of our common stock. In particular, failure to secure any necessary financing in a timely manner and on favorable terms could require us to delay or abandon clinical development plans or we may be forced to further curtail or suspend our operations. In addition, any or all of these effectsfactors could disrupt our and our collaborators’ supply chains and adversely affect our and our collaborators’ ability to conduct ongoing and future clinical trials of our product candidates.
We have historically incurred significant operating losses since inception and anticipate that we will incur continued losses for the foreseeable future.
Although we reported net income of $21.1 million for the three months ended March 31, 2023, primarily due to the termination of the Biogen collaboration agreement, we have a history of recurring net losses, including $192.3 million and $178.3 million for the years ended December 31, 2022 and 2021, respectively, and we have otherwise generated operating losses since we began operations in 1995. The extent of our future losses and durationthe timing of profitability are uncertain, and we expect to incur losses for the foreseeable future. We have been engaged in developing our ZF technology since inception, which has and will continue to require significant research and development expenditures. To date, we have generated our funding from issuance of equity securities, revenues derived from collaboration agreements, other strategic partnerships in non-therapeutic applications of our technology, federal government research grants and grants awarded by research foundations. We expect to continue to incur additional operating losses for the next several years as we continue to develop our product candidates. If the time required to generate significant product revenues and achieve profitability is longer than we currently anticipate or if we are unable to generate liquidity through equity financing or other sources of funding, we may be forced to further curtail or suspend our operations.
We will need substantial additional funding to execute our operating plan and continue to operate as a going concern. We may be unable to raise additional capital on favorable terms, if at all, which would harm or preclude our ability to develop our technology and product candidates and could delay or terminate some or all of our programs. Future sales and issuances of equity securities could also result in substantial dilution to our stockholders.
We have incurred significant operating losses and negative operating cash flows since inception and have not achieved profitability. We expect capital outlays and operating expenditures to increase over the next several years as we expand our infrastructure and research and product development activities. Moreover, we have concluded that there exists substantial doubt about our ability to continue to operate as a going concern. While we currently believe that management’s plans sufficiently alleviate the risk of substantial doubt about our ability to continue as a going concern for at least twelve months from the date that the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q are issued, we make assumptions about the probability that management's plans will be effectively implemented and alleviate substantial doubt and our ability to continue as a going concern. However, such assumptions are inherently uncertain and actual results could differ materially from those estimates. In this regard, we could use our available capital resources sooner than we currently expect and changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.
Regardless, in order to remove substantial doubt about our ability to continue as a going concern, we will be required to raise substantial additional capital to fund our operations and support our research and development endeavors. In this regard, we are actively seeking substantial additional capital, including through public or private equity or debt financings, royalty financings or other sources, such as strategic collaborations. However, additional capital may not be available to us, on terms that are acceptable or at all. If adequate funds are not available to us on a timely basis, or at all, we will be required to take additional actions to address our liquidity needs, including additional cost reduction measures such as further reducing operating expenses and delaying, reducing the scope of, discontinuing or altering our research and development activities, which could have a material adverse effect on our business, or we may be required to cease operations. In this regard, in April 2023, we announced a restructuring, including a reduction in force that we expect to result in the elimination of approximately 120 roles in the United States, and a significant reduction in our internal manufacturing and allogeneic research footprints in California. While we expect that the majority of the military action, sanctionscharges associated with the restructuring will be incurred in the second quarter of 2023 and resulting economic, marketthat the execution of the restructuring will be substantially complete by the end of the third quarter of 2024, we may also incur other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the restructuring. However, we may not achieve the expected benefits of these cost reduction measures and other cost reduction plans on the anticipated timeline, or at all, which could otherwise accelerate our liquidity needs and could force us to further curtail or
suspend our operations. Moreover, we rely in part on our collaboration partners to provide funding for and otherwise advance our pre-clinical and clinical programs. However, in June 2022, our collaboration agreement with Sanofi terminated, and in March 2023, Biogen and Novartis notified us of their respective terminations for convenience of our collaboration agreements with them effective in June 2023. While we may identify new collaboration partners who can progress some of the programs that were the subject of these collaborations, we may not be successful in doing so in a timely manner, on acceptable terms or at all, and we may otherwise fail to raise sufficient additional capital in order to progress these programs ourselves or we may determine that for internal resource allocation purposes or for other reasons to abandon development of these programs. In any event, we would require substantial additional funding in order to progress the programs that were the subject of these collaborations.
If we raise additional capital through public or private equity offerings, including sales pursuant to our at-the-market offering program with Jefferies LLC, the ownership interest of our existing stockholders will be diluted, and such dilution may be substantial, and the terms of any new equity securities may have a preference over, and include rights superior to, our common stock. If we raise additional capital through royalty financings or other collaborations, strategic alliances or licensing arrangements with third parties, we may need to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable. If we raise additional capital through debt financing, we may be subject to specified financial covenants or covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or pursuing certain transactions, any of which could restrict our ability to commercialize our product candidates or operate as a business.
In addition, as we focus our efforts on proprietary human therapeutics, we will need to seek regulatory approvals of our product candidates from the FDA or other comparable foreign regulatory authorities, a process that could cost in excess of hundreds of millions of dollars per product. We may experience difficulties in accessing the capital markets due to external factors beyond our control, such as volatility in the equity markets for emerging biotechnology companies and general economic and market conditions both in the United States and abroad. For example, our ability to raise additional capital may be adversely impacted by global economic conditions and disruptions to and volatility in the credit and financial markets in the United States and worldwide, such as has been experienced recently due in part to, among other things, the impacts of the COVID-19 pandemic, the ongoing conflict between Russia and Ukraine, and disruptions in access to bank deposits and lending commitments due to bank failure. We cannot be certain that we will be able to obtain financing on terms acceptable to us, or at all. Our failure to obtain adequate and timely funding will adversely affect our ability to continue as a going concern and our ability to develop our technology and products candidates.
Our collaborators control certain aspects of our product development efforts, including certain of our clinical trials, which could result in unanticipated delays and other obstacles in the commercialization of our product candidates.
We depend on collaborators to design and conduct certain of our clinical trials for some of our product candidates. As a result, these clinical trials may not be conducted in the manner or on the timeline we desire, which may negatively impact our product development efforts. For example, Pfizer is the trial sponsor of the Phase 3 AFFINE trial of giroctocogene fitelparvovec and we depended on the efforts of Pfizer to diligently seek to lift the clinical hold on the Phase 3 AFFINE trial and resume the trial. Although dosing in the AFFINE trial has now resumed, we cannot guarantee that we will not experience future delays in this trial or that the trial will be completed on the anticipated timeframe or at all.
Our lack of control over aspects of product development in our collaborations with Kite, Takeda and Pfizer could cause delays or other difficulties in the development and commercialization of our product candidates, which may prevent us from completing the intended IND filings in a timely fashion and receiving any milestone, royalty payments and other benefits under the agreement. In addition, under their respective agreements, our third-party collaborators have certain rights to terminate the agreements by providing us with advance notices, therefore, the actual milestone payments that we may receive under these agreements may be substantially lower than the full amounts provided for under these agreements. For example, in June 2022, our collaboration agreement with Sanofi terminated, and in March 2023, Biogen and Novartis notified us of their respective terminations for convenience of our collaboration agreements with them. As a result, we will not be entitled to any further milestone payments or royalties from any of Sanofi, Biogen or Novartis.
Our collaborators licensing our ZF technologies may decide to adopt alternative technologies or products or may be unable or unwilling to develop commercially viable products with our ZF technologies, which would negatively impact our revenues and our strategy to develop product candidates using ZF technologies.
Several of our ongoing collaborations leverage our ZF technology platform. These collaborators may elect to adopt alternative technologies in the future, which could decrease the value of our ZF technology platform and impede the development of product candidates using the platform. Additionally, because many of our collaborators are impossiblelikely to predict, butbe working on more than one development project, they could choose to shift their resources to projects other than those they are working on with us. If they do so, this would delay our ability to test and develop our ZF technology platform and would delay or terminate the development of our product candidates using the platform. Further, our collaborators may elect not to develop product candidates
arising out of our collaborations or not to devote sufficient resources to the development, manufacturing, marketing or sale of these product candidates. If they terminate the collaborations with us, such as the recent terminations for convenience of our collaboration agreements with Biogen and Novartis, and we wish to continue developing the product candidates, we will be required to seek the support of other collaborators or develop the products ourselves. We may not be able to identify a suitable partner or negotiate a favorable collaboration agreement, and we may not have sufficient resources and expertise internally, to allow us to continue the development of these product candidates.
Commercialization of our technologies will depend, in part, on collaborations with other companies. If we are not able to find collaborators in the future or if our collaborators do not diligently pursue product development efforts, we may not be able to develop our technologies or product candidates, which could slow our growth and decrease the market value of our common stock.
We do not have financial resources ourselves to fully develop, obtain regulatory approval for and commercialize our product candidates. We rely significantly on our collaborations with other biopharmaceutical companies to provide funding for our research and development efforts, including preclinical studies and clinical tests, and expect to rely significantly on such collaborations to provide funding for the lengthy regulatory approval processes required to commercialize our product candidates.
For example, we have collaborations with Kite to develop product candidates to treat cancer and with Pfizer to develop product candidates to treat hemophilia A and amyotrophic lateral sclerosis and frontotemporal lobar degeneration linked to mutations of the C9ORF72 gene. Any delays to or discontinuances of these collaborations could have a material adverse effect on our business, results of operations, financial condition and prospects.
We are also party to collaboration agreements with Novartis to develop product candidates to treat certain neurodevelopment disorders, including autism and intellectual disability and with Biogen to develop product candidates to treat tauopathies including Alzheimer’s disease, alpha-synuclein related diseases including Parkinson’s disease and other neurological diseases. In March 2023, Novartis and Biogen notified us of their respective terminations for convenience, each effective in June 2023, of their respective collaboration agreements with us. As a result of these terminations, as of the respective termination dates of the collaboration agreements, we will not be entitled to any milestone payments or royalties from Novartis or Biogen, and Novartis and Biogen will have no further obligations to develop or to reimburse the costs of any of the programs under the applicable agreement. We cannot guarantee that we will be able to come to agreement with Novartis and Biogen on appropriate transition arrangements or otherwise execute an orderly transition under the respective collaboration agreement. In April 2023, we made the strategic decision to pause further development of the programs that were the subject of these collaborations. In the future, we may identify alternative options to advance some of the programs that were subject to such agreements, including potential development internally or with a collaboration partner. However, we cannot guarantee that we will be able to successfully secure any such options, including identifying an alternative suitable collaboration partner or negotiate a favorable alternative collaboration agreement. In such case, we may be unable or unwilling to continue developing the programs subject to these collaboration agreements due to the lack of adequate capital resources or otherwise.
In June 2022, we completed the transition of the rights and obligations of Sanofi, under our prior collaboration agreement back to us. Although we expect to complete the Phase 1/2 PRECIZIN-1 study of BIVV003, our product candidate to treat SCD, we cannot guarantee that we will be able to complete this study in a timely manner or at all. Also, we do not expect to make additional material investments in our SCD program and, accordingly, do not plan to continue developing BIVV003 beyond completion of this study. Although we are currently seeking a potential collaboration partner to advance the development of BIVV003 beyond this study, we cannot guarantee that we will be able to successfully secure any such collaboration in a timely manner, on acceptable terms or at all. In such case, the continued development of BIVV003 could be substantial.further delayed or precluded altogether, in which case may choose to discontinue the BIVV003 program. Any such disruptionsfurther delays to or discontinuance of this program could have an adverse impact on our business, results of operations, financial condition and prospects.
If we are unable to secure additional collaborations or if our collaborators are unable or unwilling to diligently advance the development, regulatory approval and commercialization of our product candidates, our growth may magnifyslow and adversely affect our ability to generate funding for development of our technologies and product candidates as well as our ability to continue to operate as a going concern. In addition, our ongoing collaborators may sublicense or abandon development programs with little advance notice, or we may have disagreements or disputes with our collaborators, which would cause associated product development to slow or cease. In addition, the business or operations of our collaborators may change significantly through restructurings, acquisitions, other strategic transactions that may negatively impact their ability to advance our programs.
Under typical collaborations, we expect to receive revenue for the research and development of our product candidates based on achievement of specific milestones, as well as royalties based on a percentage of sales of any commercialized products. Achieving these milestones will depend, in part, on the efforts of our collaborators, which we have no control over, as well as our own efforts. In addition, business combinations, changes in a collaborator’s business strategy and financial difficulties or other factors could result in that collaborator abandoning or delaying development of any product candidates covered by our
collaboration agreement with that collaborator. For example, the transition back to us of the other risks describedrights and obligations of Sanofi related to BIVV003 and the related termination for convenience by Sanofi of our prior collaboration agreement followed a change in Sanofi’s strategic direction to focus on allogeneic universal genomic medicine approaches rather than autologous personalized cell therapies. In addition, Novartis’s and Biogen’s decisions to terminate their respective collaboration agreements with us each related to a recent strategic review. Further, if we fail or any collaboration partner fails to meet specific milestones, then the collaboration agreement may be terminated, which would preclude our ability to earn any additional milestone payments under that collaboration agreement and would reduce our revenues. In addition, even if a collaboration product candidate is successfully developed and approved for marketing by relevant regulatory authorities, if sales of the commercialized product fails to meet expectations, we could receive lower royalties than expected. In any event, the milestone and royalty payment opportunities associated with our collaborations involve a substantial degree of risk to achieve and may never be received. Accordingly, investors should not assume that we will receive all of the potential milestone payments provided for under our ongoing collaborations, and it is possible that we may never receive any further significant milestone payments or any royalty payments under our collaborations.
Our recent restructuring may not result in anticipated savings or operational efficiencies, could result in total costs and expenses that are greater than expected and could disrupt our business.
In April 2023, we announced a restructuring of operations and corresponding reduction in workforce, designed to reduce costs and increase focus on our key strategic priorities. We expect the Restructuring to result in the 2021 Annual Report.elimination of approximately 120 roles in the United States, or approximately 27% of our total United States workforce. We may incur additional expenses not currently contemplated due to events associated with the reduction in force, and our restructuring activities may subject us to reputational risks and litigation risks and expenses. We may not realize, in full or in part, the anticipated benefits and savings from this restructuring due to unforeseen difficulties, delays or unexpected costs, which could adversely affect our financial condition. In addition, we may need to undertake additional workforce reductions or restructuring activities in the future.
Furthermore, our restructuring may be disruptive to our operations. For example, in connection with the restructuring, we expect to transition all remaining allogeneic research activities from Sangamo US to Sangamo France. We may experience delays or other difficulties in effectuating the transition of certain research and manufacturing activities in California overseas, which could result in significant disruptions to our business and delays in our development efforts and clinical trial timelines. In addition, our workforce reduction could yield unanticipated consequences, such as attrition beyond planned staff reductions, increased difficulties in our day-to-day operations and loss of institutional knowledge and expertise. Our workforce reduction could also harm our ability to attract and retain qualified personnel who are critical to our operations.
If we fail to meet continued listing standards of the Nasdaq Stock Market LLC, our common stock may be delisted. Delisting could adversely affect the liquidity of our common stock and the market price of our common stock could decrease, and our ability to obtain sufficient additional capital to fund our operations and to continue as a going concern would be substantially impaired.
Our common stock is currently listed on the Nasdaq Global Select Market. The Nasdaq Stock Market LLC, or Nasdaq, has minimum requirements that a company must meet in order to remain listed on the Nasdaq Global Select Market. These requirements include maintaining a minimum closing bid price of $1.00 per share, or the Bid Price Requirement. While the closing price of our common stock has remained above the minimum closing bid price of $1.00 per share from January 1, 2023 through the date of filing of this report, on April 28, 2023, our common stock traded as low as $1.31 per share and in the future, the closing bid price of our common stock may fall below $1.00 per share. If the closing bid price of our common stock were to remain below $1.00 per share for 30 consecutive trading days, or we do not meet other Nasdaq listing requirements, we would fail to be in compliance with Nasdaq’s listing standards. There can be no assurance that we will continue to meet the Bid Price Requirement, or any other Nasdaq continued listing requirement, in the future. If we fail to meet these requirements, including the Bid Price Requirement and requirements to maintain minimum levels of stockholders' equity or market values of our common stock, Nasdaq may notify us that we have failed to meet the minimum listing requirements and initiate the delisting process. If our common stock is delisted, the liquidity of our common stock would be adversely affected and the market price of our common stock could decrease, and our ability to obtain sufficient additional capital to fund our operations and to continue as a going concern would be substantially impaired.
We have recorded, and may be required to record in the future, significant charges if our intangible assets or long-lived assets become impaired.
We test goodwill, indefinite-lived intangible assets and long-lived assets for impairment annually or more frequently if changes in circumstances or the occurrence of events suggest impairment exists. Any significant change in market conditions, including a sustained decline in our stock price, that indicate a reduction in carrying value may give rise to impairment in the period that the change becomes known. For example, during the three months ended March 31, 2023, as a result of the sustained decline in our stock price and related market capitalization, termination of the collaboration agreements with Biogen and Novartis,
and a general decline in equity values in the biotechnology industry, we performed an impairment assessment of goodwill, indefinite-lived intangible assets, and long-lived assets. Based on this assessment, we recognized a non-cash, pre-tax goodwill impairment charge of $38.1 million and long-lived asset impairment charge of $20.4 million during the three months ended March 31, 2023.
It is possible that changes in circumstances, many of which are outside of our control, or in the numerous variables associated with the assumptions and estimates used in assessing the appropriate valuation of our indefinite-lived intangible assets and long-lived assets, could in the future result in an impairment to our intangible assets and long-lived assets, requiring us to record impairment charges, which would adversely affect our results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
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| Exhibit number | | | Description of Document |
| 3.1 | | | |
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| 3.3 | | | |
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5.1+10.1 | | | |
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10.1#+ | | | |
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23.1+ | | | |
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| 31.1+ | | | |
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| 31.2+ | | | |
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| 32.1+ | * | | |
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| 101.INS | | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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| 101.SCH | | | Inline XBRL Taxonomy Extension Schema Document |
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| 101.CAL | | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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| 101.DEF | | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
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| 101.LAB | | | Inline XBRL Taxonomy Extension Label Linkbase Document |
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| 101.PRE | | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| 104 | | | The cover page from Sangamo’s Quarterly Report on Form 10-Q for the three months ended September 30, 2022March 31, 2023 is formatted in Inline XBRL and it is contained in Exhibit 101 |
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* The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
# Indicates management contract or compensatory plan or arrangement.
+ Filed herewith.
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.
Dated: November 3, 2022May 8, 2023 | | | | | |
| SANGAMO THERAPEUTICS, INC. |
| |
| /s/ ALEXANDER D. MACRAE |
| Alexander D. Macrae |
| President and Chief Executive Officer |
| (Principal Executive Officer) |
| |
| /s/ PRATHYUSHA DURAIBABU |
| Prathyusha Duraibabu |
| Senior Vice President and Chief Financial Officer |
| (Principal Financial and Accounting Officer) |
