Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Apr. 13, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity File Number | 001-31918 | ||
Entity Registrant Name | Aceragen, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 04-3072298 | ||
Entity Address, Address Line One | 505 Eagleview Blvd., Suite 212 | ||
Entity Address, City or Town | Exton | ||
Entity Address, State or Province | PA | ||
Entity Address, Postal Zip Code | 19341 | ||
City Area Code | 484 | ||
Local Phone Number | 348-1600 | ||
Title of 12(b) Security | Common Stock, $0.001 par value | ||
Trading Symbol | ACGN | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
ICFR Auditor Attestation Flag | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 8,423,504 | ||
Entity Public Float | $ 24 | ||
Entity Central Index Key | 0000861838 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Firm ID | 42 | ||
Auditor Name | ERNST & YOUNG LLP | ||
Auditor Location | Philadelphia, Pennsylvania |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 12,044 | $ 32,545 |
Accounts receivable | 4,208 | |
Prepaid expenses and other current assets | 1,611 | 1,493 |
Total current assets | 17,863 | 34,038 |
Property and equipment, net | 7 | 22 |
Intangible assets | 71,600 | |
Goodwill | 11,100 | |
Operating lease right-of-use assets | 537 | 734 |
Other assets | 70 | |
Total assets | 101,107 | 34,864 |
Current liabilities: | ||
Accounts payable | 5,200 | 565 |
Accrued expenses | 9,911 | 4,088 |
Acquisition obligation, net | 6,078 | |
Operating lease liability | 234 | 209 |
Total current liabilities | 21,423 | 4,862 |
Warrant liability | 2,819 | |
Series X preferred stock liability (includes 5 shares of Series X convertible preferred stock, $0.01 par value per share issued and outstanding as December 31, 2022 - Note 8) | 34,300 | |
Operating lease liability, net of current portion | 326 | 549 |
Deferred tax liability | 3,283 | |
Other liabilities | 22 | |
Total liabilities | 62,173 | 5,411 |
Commitments and contingencies (Note 15) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value, Authorized - 5,000,000 shares: Series A convertible preferred stock; Designated - 1,500,000 shares; Issued and outstanding - 241 shares | ||
Common stock, $0.001 par value, Authorized - 140,000,000 shares; Issued and outstanding - 3,653,685 and 3,106,947 at December 31, 2022 and December 31, 2021, respectively | 4 | 3 |
Additional paid-in capital | 770,663 | 764,911 |
Accumulated deficit | (758,821) | (735,461) |
Accumulated other comprehensive income (loss) | (21) | |
Total stockholders' equity | 11,826 | 29,453 |
Total liabilities, convertible redeemable preferred stock, and stockholders' equity | 101,107 | 34,864 |
Series A convertible preferred stock | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value, Authorized - 5,000,000 shares: Series A convertible preferred stock; Designated - 1,500,000 shares; Issued and outstanding - 241 shares | ||
Series Z convertible preferred stock | ||
Current liabilities: | ||
Preferred stock, $0.01 par value, Authorized - 5,000,000 shares: Series Z convertible redeemable preferred stock (Note 9); Designated - 150,000 shares, Issued and outstanding - 77,900 shares at December 31, 2022 | 27,108 | |
Series B1 convertible preferred stock | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value, Authorized - 5,000,000 shares: Series A convertible preferred stock; Designated - 1,500,000 shares; Issued and outstanding - 241 shares | $ 1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 140,000,000 | 140,000,000 |
Common stock, shares issued | 3,653,685 | 3,106,947 |
Common stock, shares outstanding | 3,653,685 | 3,106,947 |
Series A convertible preferred stock | ||
Preferred stock, shares designated | 1,500,000 | 1,500,000 |
Preferred stock, shares issued | 655 | 655 |
Preferred stock, shares outstanding | 655 | 655 |
Series B Preferred Stock | ||
Preferred stock, shares designated | 200,000 | 200,000 |
Preferred stock, shares issued | 62,355 | 62,355 |
Preferred stock, shares outstanding | 62,355 | 62,355 |
Series X convertible preferred stock | ||
Preferred stock liability, par value | $ 0.01 | |
Preferred stock liability, shares issued | 5 | |
Preferred stock liability, shares outstanding | 5 | |
Series Z convertible preferred stock | ||
Temporary equity, preferred stock, par value | $ 0.01 | $ 0.01 |
Temporary Equity, preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Temporary Equity, preferred stock, shares designated | 150,000 | |
Temporary Equity, preferred stock, shares issued | 77,900 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Consolidated Statements of Operations and Comprehensive Income (Loss) | ||
Government contracts revenue | $ 4,862 | $ 0 |
Operating expenses: | ||
Research and development | 12,188 | 16,375 |
General and administrative | 12,213 | 9,976 |
Acquisition-related costs | 4,566 | |
Restructuring and other costs | 3,713 | 1,322 |
Total operating expenses | 32,680 | 27,673 |
Loss from operations | (27,818) | (27,673) |
Other income (expense): | ||
Interest income (expense), net | 204 | 2 |
Warrant revaluation gain | 361 | 6,983 |
Series X preferred stock liability gain | (2,400) | |
Future tranche right revaluation gain | 118,803 | |
Foreign currency exchange and other gain (loss), net | (25) | (24) |
(Loss) income before income tax benefit | (29,678) | 98,091 |
Income tax benefit | 6,318 | (6,300) |
Net (loss) income | (23,360) | 98,091 |
Undistributed earnings to preferred stockholders | (1,150) | |
Net (loss) income applicable to common stockholders | (23,360) | 96,941 |
Net (loss) income applicable to common stockholders (Note 18) | ||
- Basic | (23,360) | 96,941 |
- Diluted | $ (23,360) | $ (28,845) |
Net (loss) income per share applicable to common stockholders (Note 18) | ||
- Basic | $ (7.18) | $ 33.49 |
- Diluted | $ (7.18) | $ (9.78) |
Weighted-average number of common shares used in computing net (loss) income per share applicable to common stockholders | ||
- Basic | 3,255,648 | 2,894,287 |
- Diluted | 3,255,648 | 2,948,659 |
Comprehensive (loss) income: | ||
Net (loss) income | $ (23,360) | $ 98,091 |
Income (Loss) from Continuing Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest | (23,360) | 98,091 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation | (21) | |
Other Comprehensive Income (Loss), Net of Tax | (21) | |
Total comprehensive (loss) income | $ (23,381) | $ 98,091 |
Consolidated Statements of Rede
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit) - USD ($) $ in Thousands | Common Stock | Preferred Stock Series B1 Preferred | Preferred Stock Series Z preferred stock | Preferred Stock Series B Preferred Stock | Additional Paid-In Capital | Accumulated Deficit | Other Comprehensive Income (Loss) | Total |
Temporary equity, Beginning balance (in shares) at Dec. 31, 2020 | 23,684 | |||||||
Increase (Decrease) in Temporary Equity | ||||||||
Conversion of Series B1 preferred stock (in shares) | (23,684) | |||||||
Beginning balance at Dec. 31, 2020 | $ 2 | $ 742,378 | $ (833,552) | $ (91,172) | ||||
Beginning balance (in shares) at Dec. 31, 2020 | 2,252,390 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Sale of common stock, net of issuance costs | $ 1 | 19,514 | 19,515 | |||||
Sale of common stock, net of issuance costs (in shares) | 348,079 | |||||||
Conversion of Series B1 preferred stock (in shares) | 139,317 | |||||||
Issuance of common stock under employee stock purchase plan | 59 | 59 | ||||||
Issuance of common stock under employee stock purchase plan (in shares) | 2,889 | |||||||
Issuance of common stock under equity incentive plan (vesting of restricted stock units) (in shares) | 13,927 | |||||||
Issuance of common stock upon exercise of common stock options and warrants | 271 | 271 | ||||||
Issuance of common stock upon exercise of common stock options and warrants (in shares) | 345,332 | |||||||
Issuance of common stock for services rendered | 152 | 152 | ||||||
Issuance of common stock for services rendered (in shares) | 5,013 | |||||||
Stock-based compensation expense | 2,537 | 2,537 | ||||||
Net (loss) income | 98,091 | 98,091 | ||||||
Ending balance at Dec. 31, 2021 | $ 3 | 764,911 | (735,461) | $ 29,453 | ||||
Ending balance (in shares) at Dec. 31, 2021 | 3,106,947 | 3,106,947 | ||||||
Increase (Decrease) in Temporary Equity | ||||||||
Issuance of preferred stock upon Acquisition of Aceragen | $ 27,108 | |||||||
Issuance of preferred stock upon Acquisition of Aceragen (in shares) | 77,663 | |||||||
Vesting of restricted stock awards (in shares) | 237 | |||||||
Temporary equity, Ending balance at Dec. 31, 2022 | $ 27,108 | |||||||
Temporary equity, Ending balance (in shares) at Dec. 31, 2022 | 77,900 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Sale of common stock, net of issuance costs | (15) | $ (15) | ||||||
Issuance of common stock under employee stock purchase plan | 49 | 49 | ||||||
Issuance of common stock under employee stock purchase plan (in shares) | 7,788 | |||||||
Common stock dividend issued in the form of Series B Preferred Stock | $ 1 | 1 | ||||||
Common stock dividend issued in the form of Series B Preferred Stock (in shares) | 62,355 | |||||||
Issuance of common stock under equity incentive plan (vesting of restricted stock units) (in shares) | 1,600 | |||||||
Vesting of restricted stock awards (in shares) | 1,331 | |||||||
Issuance of common stock upon exercise of common stock warrants | 15 | 15 | ||||||
Issuance of common stock upon exercise of common stock warrants (in shares) | 90,185 | |||||||
Issuance of common stock for services rendered | 88 | 88 | ||||||
Issuance of common stock for services rendered (in shares) | 10,989 | |||||||
Stock-based compensation expense | 2,188 | 2,188 | ||||||
Issuance of common stock upon Acquisition of Aceragen | $ 1 | 3,427 | 3,428 | |||||
Issuance of common stock upon Acquisition of Aceragen (in shares) | 434,845 | |||||||
Currency translation adjustment | $ (21) | (21) | ||||||
Net (loss) income | (23,360) | (23,360) | ||||||
Ending balance at Dec. 31, 2022 | $ 4 | $ 1 | $ 770,663 | $ (758,821) | $ (21) | $ 11,826 | ||
Ending balance at Dec. 31, 2022 | 62,355 | |||||||
Ending balance (in shares) at Dec. 31, 2022 | 3,653,685 | 3,653,685 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows from Operating Activities: | ||
Net (loss) income | $ (23,360) | $ 98,091 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||
Stock-based compensation | 2,188 | 2,537 |
Foreign currency translation | 6 | |
Warrant liability revaluation gain | (361) | (6,983) |
Series X preferred stock liability loss | 2,400 | |
Future tranche right liability revaluation gain | (118,803) | |
Issuance of common stock for services rendered | 88 | 152 |
Accretion of discounts on short-term investments | (1) | |
Accretion of discounts on acquisition obligation | 66 | |
Depreciation and amortization expense | 15 | 22 |
Deferred tax benefit | (6,318) | |
Changes in operating assets and liabilities, net of effects from Acquisition: | ||
Accounts receivable | (2,294) | |
Prepaid expenses and other assets | 506 | 2,134 |
Accounts payable, accrued expenses, and other liabilities | 2,548 | (1,751) |
Other | 21 | 5 |
Net cash used in operating activities | (24,495) | (24,597) |
Cash Flows from Investing Activities: | ||
Cash acquired in acquisition of Aceragen | 5,482 | |
Proceeds from maturity of available-for-sale securities | 4,500 | |
Net cash provided by investing activities | 5,482 | 4,500 |
Cash Flows from Financing Activities: | ||
Proceeds from common stock financings, net | (15) | 19,518 |
Proceeds from employee stock purchases | 49 | 59 |
Proceeds from exercise of common stock options and warrants | 15 | 271 |
Payment on Acquisition Obligation | (1,534) | |
Payments on seller-financed purchases | (435) | |
Other | (3) | |
Net cash (used in) provided by financing activities | (1,488) | 19,413 |
Net decrease in cash and cash equivalents | (20,501) | (684) |
Cash and cash equivalent, beginning of period | 32,545 | 33,229 |
Cash and cash equivalents, end of period | $ 12,044 | 32,545 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 5 | |
Supplemental disclosure of non-cash financing and investing activities: | ||
Offering costs in accrued expenses | 3 | |
Non-cash seller-financed purchases | $ 652 |
Business and Organization
Business and Organization | 12 Months Ended |
Dec. 31, 2022 | |
Business and Organization | |
Business and Organization | Note 1. Business and Organization Business Overview Aceragen, Inc. (“Aceragen” or the “Company”) (f/k/a Idera Pharmaceuticals, Inc. (“Idera”)), a Delaware corporation, is a clinical-stage biopharmaceutical company with a business strategy focused on the clinical development, and ultimately the commercialization, of drug candidates for rare disease indications characterized by small, well-defined patient populations with serious unmet medical needs. The Company’s current focus is to develop and optimize commercial value of ACG-701 (patented formulation of sodium fusidate) and ACG-801 (recombinant human acid ceramidase (rhAC)) for appropriate patients. The Company has in the past and may in the future explore clinical funding arrangements and collaborative alliances to support development and commercialization of any of its drug candidates. The Company may also seek to identify and potentially acquire rights to novel development or commercial stage rare disease programs, through new business development opportunities, including additional strategic alternatives. On September 28, 2022 (the “Effective Date”), Idera acquired Aceragen, Inc. and its wholly owned subsidiaries (“Legacy Aceragen”), in accordance with the terms of the Agreement and Plan of Merger, dated as of the Effective Date (the “Merger Agreement”). Legacy Aceragen was a privately-held biotechnology company addressing severe, rare, and orphan pulmonary and rheumatic diseases for which there are limited or no available treatments. The Company acquired Legacy Aceragen as a strategic extension of its rare disease business and focus with the primary objective of further developing Legacy Aceragen’s portfolio of rare disease product candidates. Following the Special Meeting of Stockholders held on January 12, 2023 (the “Special Meeting”), Idera’s name was changed to Aceragen, Inc. (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Aceragen Acquisition”). See Note 3, “Business Acquisition,” f Prior to December 2021, the Company was developing a toll-like receptor agonist, tilsotolimod (IMO-2125), for oncology indications. In December 2021, all Company-sponsored development of tilsotolimod was discontinued and all study-related activities have subsequently been concluded. However, the Company is considering the potential for out-licensing arrangements so that tilsotolimod’s full potential might continue to be explored on behalf of patients who did not respond to traditional immunotherapy, together with other alternatives. Liquidity and Financial Condition The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements—Going Concern The Company has incurred substantial losses and negative cash flows from operations since its inception and had an accumulated deficit of $758.8 million as of December 31, 2022. The Company’s cash and cash equivalents balance of $12.0 million as of December 31, 2022 is not sufficient to fund its operations for the one-year period after the date the financial statements are issued. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development. The Company is subject to a number of risks and uncertainties similar to those of other companies of the same size within the biotechnology industry, such as uncertainty of clinical trial outcomes, uncertainty of additional funding, and history of operating losses. Substantial additional financing will be needed by the Company to fund its operations and to commercially develop its product candidates. Management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may include, but are not limited to: product development financing, private placements and/or public offerings of equity and/or debt securities, payments from potential strategic research and development collaborations and/or similar arrangements, and payments from the potential sale and/or licensing of technology assets. There can be no assurance that these future funding efforts will be successful. Accordingly, management has concluded that substantial doubt exists with respect to the Company’s ability to continue as a going concern within one year after the date that these financial statements are issued. Reverse Stock Split As further described in Note 19, on January 17, 2023, the Company effected a 1 -for-17 reverse stock split of the Company's outstanding shares of common stock, as approved by the Company’s stockholders at the Special Meeting. All share and per share amounts of common stock, options, warrants, restricted stock, restricted stock units, and conversion ratio of convertible preferred stock and convertible preferred stock warrants in the accompanying consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to reflect the reverse stock split. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Aceragen, LLC, including Aceragen, LLC’s wholly owned subsidiaries, Arrevus, Inc., a Delaware Corporation (“Arrevus”), and Aceragen GmbH, a limited liability company (“AGmbH”). All intercompany accounts and transactions have been eliminated in consolidation. The Company has determined the functional currency of AGmbH to be the Swiss Franc. The Company translates assets and liabilities of AGmbH’s operations at exchange rates in effect at the balance sheet date Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgements, and assumptions that affect the reported amounts of assets and liabilities at the date of consolidated financial statements and reported amounts of revenues and expenses during the reporting period, and related disclosure of contingencies in the accompanying consolidated financial statements and these notes. In addition, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from these estimates. Segment Information Operating segments are defined as components of an enterprise in which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and assessing performance. The Company views its operations and manages its business as one operating segment, which is the business of developing novel therapeutics for rare diseases. Financial Instruments The fair value of the Company’s financial instruments is determined and disclosed in accordance with the three-tier fair value hierarchy specified in Note 4. The Company is required to disclose the estimated fair values of its financial instruments. As of December 31, 2022, the Company’s financial instruments included cash and cash equivalents, accounts receivable, accounts payable, Acquisition Obligation (defined below), and Series X Preferred Stock and Series Z Preferred Stock Warrant liabilities. As of December 31, 2021, the Company’s financial instruments consisted of cash and cash equivalents. Concentration of Credit Risk Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash, which, at times, may exceed federally insured limits, and cash equivalents consisting of investments in money market funds managed by a variety of financial institutions. The Company's credit risk is managed by investing in only highly rated money market instruments. As a result, no significant additional credit risk is believed by management to be inherent in the Company’s assets and the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk on such accounts. As of December 31, 2022, the Company’s cash and cash equivalents were held at six financial institutions. As more fully described in Note 19, “Subsequent Events” the Company had approximately 56% of its cash and cash equivalent balances in segregated custodial accounts held by a third-party custodian for which SVB (as defined below) was the Company’s agent and/or SVB Asset Management, an affiliate of SVB, was the advisor at the time SVB was closed. The Company does not believe it will be impacted by the closure of SVB. Business Combinations The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business. If determined to be a business combination, the Company accounts for the transaction under the acquisition method of accounting as indicated in ASU 2017-01, Business Combinations (ASC 805) Business Combinations Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of 90 days or less when purchased to be “cash equivalents.” Cash and cash equivalents at December 31, 2022 and 2021 consisted of cash and money market funds. Accounts Receivable The U.S. Government accounted for all of the Company’s accounts receivable as of December 31, 2022. Accordingly, the Company does not expect any credit losses with respect to its accounts receivable and no credit losses have been incurred to date. Included in accounts receivable at December 31, 2022 is $0.4 million of unbilled receivables which relates to revenue recognized for work that has been performed but the invoicing has not yet occurred as of the reporting date. Property and Equipment Property and equipment are carried at acquisition cost less accumulated depreciation, subject to review for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable as described further under the heading "Impairment of Long-Lived Assets" below. The cost of normal, recurring, or periodic repairs and maintenance activities related to property and equipment are expensed as incurred. The cost for planned major maintenance activities, including the related acquisition or construction of assets, is capitalized if the repair will result in future economic benefits. Depreciation and amortization are computed using the straight-line method based on the estimated useful lives of the related assets. Leasehold improvements are amortized over the remaining lease term or the related useful life, if shorter. Equipment and other long-lived assets are depreciated over three When an asset is disposed of, the associated cost and accumulated depreciation is removed from the related accounts on the Company's balance sheet with any resulting gain or loss included in the Company's consolidated statement of operations. Indefinite-Lived Intangible Assets Indefinite-lived intangible assets consist of In-Process Research and Development (“IPR&D”). The fair values of IPR&D project assets acquired in business combinations are capitalized. The Company generally utilizes the Multi-Period Excess Earning Method to determine the estimated fair value of the IPR&D assets acquired in a business combination. The projections used in this valuation approach are based on many factors, such as relevant market size, the estimated probability of regulatory success rates, anticipated patent protection, expected pricing, expected treated population, and estimated payments (e.g., royalty). The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets are amortized over the remaining useful life or written off, as appropriate. Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company considers many factors in evaluating whether the value of our intangible assets with indefinite lives may not be recoverable, including, but not limited to, expected growth rates, the cost of equity and debt capital, general economic conditions, our outlook and market performance of our industry and recent and forecasted financial performance. The Company evaluates indefinite-lived intangible assets for impairment at least annually on October 1 and whenever facts and circumstances indicate that their carrying amounts may not be recoverable. For the year ended December 31, 2022, the Company determined that there was no impairment to IPR&D. Goodwill Goodwill represents the amount of consideration paid in excess of the fair value of net assets acquired as a result of the Company’s business acquisitions accounted for using the acquisition method of accounting. The intangible assets acquired represented the fair value of IPR&D which has been recorded on the accompanying consolidated balance sheet as indefinite-lived intangible assets. A deferred tax liability was recorded for the difference between the fair value of the acquired IPR&D and its tax basis which was recognized as goodwill in applying the purchase method of accounting. Goodwill is not amortized and is subject to impairment testing at a reporting unit level on an annual basis or when a triggering event occurs that may indicate the carrying value of the goodwill is impaired. An entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The Company evaluates goodwill for impairment at least annually on October 1 and whenever facts and circumstances indicate that their carrying amounts may not be recoverable. For the year ended December 31, 2022, the Company determined that there was no impairment to goodwill. Operating Lease Right-of-use Asset and Lease Liability The Company accounts for leases under ASC 842, Leases Property, Plant, and Equipment As of December 31, 2022 and 2021, the Company’s operating lease ROU assets and corresponding short-term and long-term lease liabilities primarily relate to its existing Exton, Pennsylvania facility operating lease, which expires on May 31, 2025. In connection with the Aceragen Acquisition, the Company acquired an operating lease for an office in Basel, Switzerland, which expired on March 31, 2023. Impairment of Long-Lived Assets In accordance with ASC 360-10-35, Impairment or Disposal of Long-Lived Assets Warrant Liability The Company accounts for stock warrants as either equity instruments, liabilities or derivative liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity Derivatives and Hedging In connection with the Aceragen Acquisition, a portion of the consideration paid to Legacy Aceragen warrant holders was in the form of warrants to purchase shares of Series Z Preferred Stock (“Series Z Warrants”). Such warrants were classified as liabilities upon issuance and as of December 31, 2022 because the underlying Series Z Preferred Stock is contingently redeemable. The fair value of the Series Z Warrants on the date of issuance was recorded as a component to the carrying value of the shares Series Z Preferred Stock and as a long-term liability in the consolidated balance sheets. The Series Z Warrants are remeasured to fair value at each balance sheet date until the warrants are exercised, reclassified, expire, or otherwise settled. Changes in the fair values of the Series Z Warrants are recognized as other income or expense in the consolidated statements of operations and comprehensive loss. See Notes 3, 4, and 9 to these consolidated financial statements for further details. Redeemable Preferred Stock The Company applies ASC 480 when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity. See Notes 8, 9 and 10 to these consolidated financial statements. Series X Preferred Stock Liability In conjunction with the Aceragen Acquisition, the Company evaluated the newly issued Series X Preferred Stock and determined its revised terms represents a sale of future revenues and is classified as a liability under ASC 470, Debt Future Tranche Right Liability and Revaluation Gain The December 2019 Securities Purchase Agreement (as defined in Note 9) contained call options on redeemable preferred shares with warrants (conditionally exercisable for shares that are puttable). The Company determined that these call options represent freestanding financial instruments and accounted for the options as liabilities under ASC 480, which required the measurement and recognition of the fair value of the liability at the time of issuance and at each reporting period until such call options were exercised or cancelled. During the year ended December 31, 2021, the liability-classified call options provided for under the December 2019 Securities Purchase Agreement terminated and, accordingly, the liability balance was derecognized resulting in a future tranche right revaluation gain recorded in the Company’s statements of operations. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers ● identify the contract(s) with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to the performance obligations in the contract; and ● recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it determines that it is probable it will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Amounts received prior to satisfying the revenue recognition criteria are recognized as deferred revenue in the Company’s balance sheet. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current portion of deferred revenue. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion. Government Contract Revenue Revenues from reimbursable contracts are recognized as costs are incurred, generally based on allowable direct costs incurred during the period, plus allocable overheads together with any recognizable earned fee. The Company uses this output method to measure progress as the customer has access to the development research under these projects and benefits incrementally as research and development activities occur. See Note 11, “Government Contracts Revenue,” of the notes to these consolidated financial statements for discussion of the Company’s cost reimbursement contracts. Other Revenues Certain of the Company’s collaborative research, development, and/or commercialization agreements may result in the recognition of revenue for one or more of the following: nonrefundable, up-front license fees; research, development, and commercial milestone payments; and other contingent payments due based on the activities of the counterparty or the reimbursement by licensees of costs associated with patent maintenance. See Note 12, “Clinical Funding, Collaboration and License Agreements,” of the notes to these consolidated financial statements for additional details regarding the Company’s collaboration and out-licensing arrangements. Customer Concentration Risk The U.S. Government accounted for all of the Company’s revenues for the year ended December 31, 2022. Research and Development Prepayments, Accruals and Related Expenses All research and development expenses are expensed as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including drug development trials and studies, research collaborations, drug manufacturing, laboratory supplies, external research, payroll including stock-based compensation and overhead. The Company is required to estimate our accrued and prepared expenses for research and development activities performed by third parties, including Clinical Research Organizations (“CROs”) and clinical investigators. These estimates are made as of the reporting date of the work completed over the life of the individual study in accordance with agreements established with CROs and other clinical sites. Some CROs invoice the Company on a monthly basis, while others invoice upon the achievement of milestones. The Company determines the estimates of research and development activities incurred at the end of each reporting period through discussion with internal personnel, outside service providers, and research collaboration partners as to the progress or stage of completion of trials or services, as of the end of the reporting period, pursuant to contracts with clinical trial centers or CROs and the agreed upon fee to be paid for such services. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are accepted by the Company or the services are performed. As of December 31, 2022 and 2021, the Company recorded approximately $0.6 million and $0.9 million, respectively, as prepaid research and development, which is included within prepaid expenses and other current assets in the accompanying balance sheets. Acquisition-Related Costs Acquisition-related costs include direct expenses incurred in connection with the Aceragen Acquisition, as well as integration-related professional fees and other incremental costs directly associated to the Aceragen Acquisition. Stock-Based Compensation The Company accounts for stock-based compensation using ASC 718, Compensation – Stock Compensation Equity – Equity Based Payments to Non-Employees The Company recognizes all share-based payments to employees and directors as expense in the statements of operations based on their fair values. The Company records compensation expense on a straight-line basis over an award’s requisite service period, or vesting period, based on the award’s fair value at the date of grant. Vesting for time-based options and restricted stock units is generally four years for employees and one year for directors. The Company uses a Black-Scholes option-pricing model to determine the fair value of each option grant as of the date of grant for expense incurred. The Black-Scholes option pricing model requires inputs for risk-free interest rate, dividend yield, expected stock price volatility and expected term of the options. Forfeitures are accounted for as they occur. See Note 14, “Stock-based Compensation,” for additional details. Income Taxes An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by a net operating loss carryover. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. In the event the Company is charged interest or penalties related to income tax matters, the Company would record such interest as interest expense and would record such penalties as other expense in the Statements of Operations. No such charges have been incurred by the Company. For each of the years ended December 31, 2022 and 2021, the Company had no uncertain tax positions. See Note 16, “Income Taxes,” for additional details. Net Income (Loss) per Common Share Applicable to Common Stockholders The Company uses the two-class method to compute net income per common share during periods the Company realizes net income and has securities outstanding (e.g., redeemable convertible preferred stock) that entitle the holder to participate in dividends and earnings of the Company. In addition, the Company analyzes the potential dilutive effect of outstanding redeemable convertible preferred stock under the "if-converted" method when calculating diluted earnings per share and reports the more dilutive of the approaches (two class or "if-converted"). The two-class method is not applicable during periods with a net loss, as the holders of the redeemable convertible preferred stock have no obligation to fund losses. The Company also analyzes the potential dilutive effect of outstanding stock options, unvested restricted stock and restricted stock units, warrants and shares underlying future tranche rights under the treasury stock method (as applicable), during periods of income, or during periods in which income is recognized related to changes in fair value of its liability-classified securities. New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB and rules are issued by the Securities and Exchange Commission (“SEC”) that the Company has or will adopt as of a specified date. Unless otherwise noted, management does not believe that any other recently issued accounting pronouncements issued by the FASB or guidance issued by the SEC had, or is expected to have, a material impact on the Company’s present or future financial statements. |
Business Acquisition
Business Acquisition | 12 Months Ended |
Dec. 31, 2022 | |
Business Acquisition | |
Business Acquisition | Note 3. Business Acquisition On the Effective Date, and in accordance with the terms of the Merger Agreement, the Company acquired 100% of the outstanding security interests of Legacy Aceragen in a “stock-for-stock” transaction whereby all Legacy Aceragen outstanding equity interests were exchanged for a combination of shares of Company common stock, shares of Series Z Preferred Stock, and shares of the newly designated Series X non-voting preferred stock, par value $0.01 per share (“Series X Preferred Stock”). Under the terms of the Merger Agreement, Legacy Aceragen stockholders received (i) 451,608 shares of the Company’s common stock (inclusive of unvested restricted common stock – see Note 14), (ii) 80,656 shares of Series Z Preferred Stock (inclusive of unvested restricted preferred stock – see Note 14) and (iii) five shares of Series X Preferred Stock. In addition, all outstanding options and warrants to purchase Legacy Aceragen common stock were assumed by the Company and converted into stock options and warrants to purchase shares of the Company’s common stock and Series Z Preferred Stock on terms substantially identical to those in effect prior to the Aceragen Acquisition, except for adjustments to the underlying number of shares and the exercise price based on the Merger Agreement exchange ratio. The Aceragen Acquisition was unanimously approved by the board of directors of the Company and the board of directors of Legacy Aceragen. The closing of the transaction was not subject to the approval of the Company’s stockholders. Pursuant to the Merger Agreement, at the Special Meeting the Company’s stockholders approved, among other matters: (i) the conversion of Series Z Preferred Stock into shares of common stock in accordance with Nasdaq Listing Rule 5635(a) (the “Conversion Proposal”) and (ii) a proposal to amend our Restated Certificate of Incorporation to effect a reverse stock split of all of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split Proposal” and, together with the Conversion Proposal, the “Merger Agreement Meeting Proposals”). The Company’s transaction costs of $4.6 million were expensed as incurred and included in the “Acquisition-related costs” financial statement line item in the Company’s consolidated statement of operations. The transaction was accounted for under the acquisition method of accounting. Under the acquisition method, the total purchase price of the acquisition is allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on the fair values as of the date of the acquisition. Consideration paid is comprised of the estimated fair value of various securities issued including the Series Z Preferred Stock, Series X Preferred Stock, stock options, restricted stock and warrants issued to Legacy Aceragen shareholders. In the fourth quarter of fiscal 2022, the preliminary purchase price allocation was updated, including the related determination of fair value of these securities issued as consideration, the allocation of consideration to the specific in-process research and development programs acquired and the related income tax implications for the updates to the purchase price allocation. The fair value of the consideration totaled approximately $65.6 million, summarized as follows: (In thousands) Common stock issued to Aceragen stockholders $ 2,809 Series Z issued to Aceragen stockholders (Note 9) 25,085 Series X liability in connection with Aceragen Acquisition (Note 8) 31,900 Stock options, restricted stock and warrants allocated to consideration paid 5,822 Total Consideration paid $ 65,616 The Company recorded the assets acquired and liabilities assumed as of the date of the Aceragen Acquisition based on the information available at that date. The following table presents the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed as of the Aceragen Acquisition date: (In thousands) Assets acquired: Cash and cash equivalents $ 5,482 Receivables 1,914 Prepaid expenses and other assets 575 In-process research and development assets 71,600 Goodwill 11,100 $ 90,671 Liabilities assumed: Accounts Payable and accrued expenses $ 7,886 Acquisition Obligation (Note 7) 7,546 Operating lease liabilities 22 Deferred tax liabilities 9,601 $ 25,055 Net assets acquired $ 65,616 The fair value of IPR&D was capitalized as of the Aceragen Acquisition date and accounted for as indefinite-lived intangible assets until completion or disposition of the assets or abandonment of the associated research and development efforts. Upon successful completion of the development efforts, the useful lives of the IPR&D assets will be determined based on the anticipated period of regulatory exclusivity and will be amortized within operating expenses. Until that time, the IPR&D assets will be subject to impairment testing and will not be amortized. The goodwill recorded related to the acquisition is the excess of the fair value of the consideration transferred by the acquirer over the fair value of the net identifiable assets acquired and liabilities assumed at the date of the Aceragen Acquisition. The goodwill recorded is not deductible for tax purposes. The following summarizes the Company’s intangible assets acquired in connection with the Aceragen Acquisition and their carrying value as of December 31, 2022. Carrying Value as of Acquisition Date December 31, (In thousands) Fair Value Impairment 2022 ACG-701 for Cystic Fibrosis $ 50,700 $ — $ 50,700 ACG-701 for Melioidosis 14,900 — 14,900 ACG-801 for Farber Disease 6,000 — 6,000 Total in-process research and development costs (IPR&D) $ 71,600 $ — $ 71,600 Intangible asset fair values for the three IPR&D programs were determined using the Multi-Period Excess Earnings Method (“MPEEM”) which is a form of the income approach. Under the MPEEM, the fair value of an intangible asset is equal to the present value of the asset's incremental after-tax cash flows (excess earnings) remaining after deducting the market rates of return on the estimated value of contributory assets (contributory charge) over its remaining useful life. To calculate fair value of acquired IPR&D programs under the MPEEM, the Company uses probability-weighted cash flows discounted at a rate considered appropriate given the significant inherent risks associated with drug development by development-stage companies. Cash flows were calculated based on estimated projections of revenues and expenses related to each program and then reduced by a contributory charge on requisite assets employed. Contributory assets included debt-free working capital, net fixed assets and assembled workforce. Rates of return on the contributory assets were based on rates used for comparable market participants. Cash flows were assumed to extend through the market exclusivity period estimated to be provided by orphan drug designation. The resultant cash flows were then discounted to present value using a weighted-average cost of equity capital for companies with profiles substantially similar to that of each acquired IPR&D program, which the Company believes represents the rate that market participants would use to value the assets. The Company compensated for the phase of development of each program by probability-adjusting its estimation of the expected future cash flows. The projected cash flows were based on significant assumptions, such as the time and resources needed to complete the development and approval of each IPR&D program, estimates of revenue and operating profit related to the program considering its stage of development, the life of the potential commercialized product and associated risks, including the inherent difficulties and uncertainties in drug development, such as obtaining marketing approval from the FDA and other regulatory agencies, and risks related to the viability of and potential alternative treatments in any future target markets. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the Aceragen Acquisition had taken place on January 1, 2021. The unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date. December 31, (In thousands) 2022 2021 Net revenues $ 18,196 $ 1,005 Net (loss) income $ (35,379) $ 80,502 Nonrecurring pro forma transaction costs directly attributable to the Aceragen Acquisition was $11.2 million for the year ended December 31, 2022. There were no such costs for the year ending December 31, 2021. The costs deducted included success fees of $4.0 million in the aggregate incurred with financial advisors in connection with the Aceragen Acquisition. Additionally, the Company incurred $0.8 million in retention costs as a result of stay bonuses to employees immediately following the closing of the Aceragen Acquisition. The Company also incurred $3.7 million in restructuring costs related to the reduction-in-workforce during 2022 (see Note 13). These costs are excluded from the pro forma financial information for the year ended December 31, 2022. In addition, the Company recognized the $6.3 million income tax benefit for the year ended December 31, 2021 as if the transaction was completed on January 1, 2021. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | Note 4. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company applies the guidance in ASC 820, Fair Value Measurement The Company uses a fair value hierarchy, which distinguishes between assumptions based on market data (observable inputs) and an entity's own assumptions (unobservable inputs). The guidance requires that fair value measurements be classified and disclosed in one of the following three categories: ● 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 measurement and unobservable (i.e., supported by little or no market activity). Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each reporting period. There were no transfers between Level 1 2, 3 year ended December 31 2022 The table below presents the assets and liabilities measured and recorded in the consolidated financial statements at fair value on a recurring basis at December 31, 2022 and 2021 categorized by the level of inputs used in the valuation of each asset and liability. December 31, 2022 (In thousands) Total Level 1 Level 2 Level 3 Assets Cash $ 3,342 $ 3,342 $ — $ — Cash equivalents – money market funds 8,702 8,702 — — Total assets $ 12,044 $ 12,044 $ — $ — Liabilities Warrant liability $ 2,819 $ — $ — $ 2,819 Series X Preferred Stock liability 34,300 — — 34,300 Total liabilities $ 37,119 $ — $ — $ 37,119 December 31, 2021 (In thousands) Total Level 1 Level 2 Level 3 Assets Cash $ 250 $ 250 $ — $ — Cash equivalents – money market funds 32,295 32,295 — — Total assets $ 32,545 $ 32,545 $ — $ — The Level 1 assets consist of cash and money market funds, which are actively traded daily. The Level 3 liabilities include the Company’s warrant liability and Series X Preferred Stock liability. Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis Warrant Liability and Series X Preferred Stock Liability The reconciliation of the Company's warrant and Series X Preferred Stock liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows: Series X Warrant Preferred Stock (In thousands) Liability Liability Balance, December 31, 2021 $ — $ — Issuance in connection with the Aceragen Acquisition 3,180 31,900 Change in fair value (361) 2,400 Balance, December 31, 2022 $ 2,819 $ 34,300 Assumptions Used in Determining Fair Value of Liability-Classified Warrants The Company utilizes an option pricing model to value its liability-classified warrants. Inherent in the valuation model are assumptions related to volatility, risk-free interest rate, expected term, and dividend rate. The fair value of the warrants has been estimated with the following weighted-average assumptions: December 31, 2022 Risk-free interest rate 4.09% Expected dividend yield — Expected term (years) 4.1 Expected volatility 104% Stock price (common stock) $ 5.95 Discount rate applied to preferred shares 15% Exercise price (per share) $ 7.82 Assumptions Used in Determining Fair Value of Liability-Classified Series X Preferred Stock The fair value of the Series X Preferred Stock represents the present value of estimated future payments that include royalty payments, as well as potential payments contingent upon the Company being awarded a priority review voucher (“PRV”). The Company utilized an income approach and Monte Carlo simulation method to determine the estimated fair value of the Series X Preferred Stock. The inputs used in the valuation approach are based on many factors such as estimated sales proceeds related to the PRV, the relevant market size, the estimated probability of regulatory success rates, anticipated patent protection, expected pricing, expected treated population, sales by region, estimated royalty payments and discount rate. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Property and Equipment | Note 5. Property and Equipment At December 31, 2022 and 2021, net property and equipment at cost consisted of the following: December 31, December 31, ($ in thousands) 2022 2021 Leasehold improvements $ 107 $ 107 Equipment and other 712 712 Total property and equipment, at cost $ 819 $ 819 Less: Accumulated depreciation and amortization 812 797 Property and equipment, net $ 7 $ 22 Depreciation and amortization expense on property and equipment was less than $0.1 million for each of the years ended December 31, 2022 and 2021. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses | |
Accrued Expenses | Note 6. Accrued Expenses At December 31, 2022 and 2021, accrued expenses consisted of the following: December 31, December 31, ($ in thousands) 2022 2021 Payroll and related costs $ 1,886 $ 477 Clinical and nonclinical trial expenses 2,106 2,909 Professional and consulting fees 1,637 591 Restructuring and other costs (Note 13) 2,327 — Acquisition-related costs 1,666 — Other 289 111 Total accrued expenses $ 9,911 $ 4,088 |
Acquisition Obligation
Acquisition Obligation | 12 Months Ended |
Dec. 31, 2022 | |
Acquisition Obligation | |
Acquisition Obligation | Note 7. Acquisition Obligation As a result of the Aceragen Acquisition, the Company assumed an obligation pursuant to the Arrevus Merger Agreement (as defined below), whereby Legacy Aceragen was obligated to make an aggregate future payment of $7.5 million to the Former Stockholders (as defined below), $6.0 million and $1.5 million of which was originally due in October 2022 and January 2023, respectively (the “Acquisition Obligation”). The estimated fair value of the Acquisition Obligation on the Effective Date was $7.5 million. During the fourth quarter of 2022, $1.5 million of the $7.5 million obligation was paid. In connection with the closing of the Aceragen Acquisition, Legacy Aceragen entered into a binding term sheet (the “Term Sheet”) with the representative of certain former stockholders of Arrevus (the “Former Stockholders”), pursuant to which Legacy Aceragen and the Former Stockholders agreed to defer certain payments owed by Legacy Aceragen to the Former Stockholders under that certain Agreement and Plan of Merger, dated October 18, 2021, by and among Legacy Aceragen, Arrevus, and their respective affiliates (the “Arrevus Merger Agreement”), in an aggregate amount of $6.0 million (the “Deferred Payments”) until October 24, 2023. The Deferred Payments bear interest at 12% per annum, paid quarterly beginning on April 1, 2023. The Company may prepay the Deferred Payments at any time, subject to payment in full in cash of the Deferred Payments, plus accrued interest up until the date of such prepayment. Any prepayment of the Deferred Payments must be made on a pro-rata basis among The Term Sheet provided that the Deferred Payments will be memorialized in 12% convertible unsecured promissory notes to be issued by the Company, pursuant to which each Former Stockholder will have the right to convert such Former Stockholder’s portion of its right to receive the Deferred Payments into shares of common stock (the “Convertible Notes”), The Term Sheet further provides that the Convertible Notes will provide the Former Stockholders with customary registration rights covering the Common Stock issued following any conversion of the Convertible Notes. See Note 19 for discussion of Convertible Notes issued in January 2023. During the period the Term Sheet was in effect, the Company imputed interest expense using the effective interest method based on the difference between the estimated fair value and the notional value. Interest expense for the year ended December 31, 2022 was immaterial. |
Series X Preferred Stock Liabil
Series X Preferred Stock Liability | 12 Months Ended |
Dec. 31, 2022 | |
Series X Preferred Stock Liability | |
Series X Preferred Stock Liability | Note 8. Series X Preferred Stock Liability In connection with the Aceragen Acquisition, the Company issued five shares of Series X Preferred Stock. The shares of Series X Preferred Stock are non-convertible and non-voting and are entitled to discrete development and commercial milestone payments as well as royalty payments on net product sales of ACG-801 for Farber disease. The royalty rates range between low single digits to low double digits and expire, unless terminated earlier, upon the later of the expiration of the last valid claim in the licensed patent rights in such country covering such product and the expiration of data exclusivity in such country for such product. In addition, the payments due to the holders of the Series X shares are secured by substantially all of the assets related to ACG-801. The Company concluded that the shares of Series X Preferred Stock do not represent a residual interest in the Company and are accounted for as debt. The liabilities associated with the shares of Series X Preferred Stock require the Company to make certain estimates and assumptions, particularly about the achievement of future development and regulatory milestones and future product sales. Such estimates and assumptions are utilized in determining the expected repayment term, accretion of interest expense and classification between current and long-term portions of amounts outstanding. The Company elected to carry the Series X Preferred Stock liability at fair value, and the debt instrument is outside the scope of ASC 480, Distinguishing Liabilities from Equity Debt |
Redeemable Convertible Preferre
Redeemable Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2022 | |
Redeemable Convertible Preferred Stock | |
Redeemable Convertible Preferred Stock | Note 9. Redeemable Convertible Preferred Stock Series B1 Preferred Stock On December 23, 2019, the Company entered into a Securities Purchase Agreement (the “December 2019 Securities Purchase Agreement”) with institutional investors affiliated with Baker Brothers Advisors, LP (the “Purchasers”). Pursuant to the December 2019 Securities Purchase Agreement, the Company sold 23,684 shares of Series B1 convertible preferred stock (“Series B1 Preferred Stock”) and warrants to purchase 139,318 shares of the Company’s common stock at an exercise price of $25.84 per share (or, if the holder elected to exercise the warrants for shares of Series B1 Preferred Stock, 23,684 shares of Series B1 Preferred Stock at an exercise price of $2,584 per share) for aggregate gross proceeds of $3.9 million. Due to the redeemable nature of the Series B1 Preferred Stock, the Series B1 Preferred Stock was classified as temporary equity and the carrying value was being accreted to its redemption value as of December 31, 2020 and while the Series B1 Preferred Stock was outstanding during 2021. During 2021, all the Company’s 23,684 shares of Series B1 Preferred Stock outstanding were converted into shares of the Company’s common stock. The Series B1 warrants were classified as liabilities until their termination in March 2021 as the underlying shares were potentially redeemable and such redemption was deemed to be outside of the Company’s control. Series B2, B3 and B4 Preferred Stock (Future Tranche Rights) Pursuant to the December 2019 Securities Purchase Agreement, the Company agreed to sell to the Purchasers, at their option and subject to certain conditions, (i) 98,685 shares of the Company’s Series B2 convertible preferred stock (“Series B2 Preferred Stock”) and 580,500 warrants to purchase common stock at an exercise price of $25.84 per share (or, at the election of the holder, 98,685 shares of Series B2 Preferred Stock at an price of $2,584.00 per share), for aggregate gross proceeds of $15 million (the “Series B2 Tranche”), (ii) 82,418 shares of Series B3 convertible preferred stock (“Series B3 Preferred Stock”) and 387,849 warrants to purchase common stock at an exercise price of $30.94 per share (or, at the election of the holder, 65,934 shares of Series B3 Preferred Stock at a price of $3,094.00 per share), for aggregate gross proceeds of $15.0 million (the “Series B3 Tranche”), and (iii) 82,418 shares of Series B4 convertible preferred stock (“Series B4 Preferred Stock”) and 387,849 warrants to purchase common stock at an exercise price of $30.94 per share (or, at the election of the holder, 65,934 shares of Series B3 Preferred Stock at a price of $3,094.00 per share), for aggregate gross proceeds of $15.0 million (the “Series B4 Tranche”) (collectively, the “Future Tranche Rights”) over a period of up to 21 months following the Company’s 2020 Annual Meeting of Stockholders held on May 12, 2020. As consideration for the Future Tranche Rights, the Company received aggregate gross proceeds of $6.2 million in December 2019. The purchase and sale of the securities issuable under the Series B2, B3, and B4 tranches described above were subject to three separate closings, each to be conducted at the purchasers’ discretion. As a result of the Purchasers not exercising the Series B2 Tranche prior to expiration, all Future Tranche Rights and outstanding warrants previously issued pursuant to the December 2019 Securities Purchase Agreement were terminated during the year ended December 31, 2021. Accordingly, the Company is no longer eligible to receive additional proceeds pursuant to the December 2019 Securities Purchase Agreement. The Future Tranche Rights were classified as liabilities until their termination in March 2021. Changes to the fair value of the future tranche right liability each reporting period, including the derecognition of the liability during the year ended December 31, 2021, is included in Future Tranche Right Liability Revaluation Gain in the Company’s statements of operations. Series Z Redeemable Preferred Stock In connection with the Aceragen Acquisition, the Company issued 80,656 shares of Series Z Preferred Stock. The Series Z Preferred Stock did not have voting rights except for voting on specific corporate matters including (i) changes to the rights and preferences of the Series Z Preferred Stock, (ii) issuance of additional Series Z Preferred Stock, and (iii) enter into a fundamental transaction such as a sale of the Company. Certain provisions of the Series Z Preferred Stock are as follows: ● Conversion: Upon obtaining stockholder approval at the Special Meeting, each share of Series Z automatically converted into 58.82 shares of common stock, subject to beneficial ownership limitations. ● Dividends: Series Z Preferred Stock was eligible to participate in any dividends with common stockholders on an as-converted basis ● Liquidation: In the event of the liquidation, dissolution, or winding up of the affairs of the Company (a “Liquidity Event ”), prior to stockholder approval at the Special Meeting, the holders of Series Z Preferred Stock would have been entitled to receive a liquidation preference prior to any payment to the holders of common stock. ● Redemption : In the event the Company would have been unable to obtain an affirmative stockholder vote at the Special Meeting to permit conversion, each holder of Series Z Preferred Stock would have been entitled to elect, at the holder’s option, to have the shares of Series Z Preferred Stock be redeemed by the Company and equal to the estimated fair value of the Series Z Preferred Stock share at the time of redemption. Due to this redemption feature, as of December 31, 2022, the Series Z Preferred Stock was classified within temporary equity on the consolidated balance sheet. The carrying value of the shares of Series Z is accreted to redemption value using the estimated fair value of the redemption value at each reporting period until the redeemable convertible preferred stock cease to be outstanding or the redemption right has expired. There was no accretion for the year ended December 31, 2022. As more fully described in Note 19, “Subsequent Events”, in January 2023, following shareholder approval of the Merger Agreement Proposals at the Special Meeting, all outstanding Series Z Preferred Stock converted into shares of common stock. |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity (Deficit) | |
Stockholders' Equity (Deficit) | Note 10. Stockholders’ Equity (Deficit) Preferred Stock The Restated Certificate of Incorporation, as amended, of the Company permits its Board of Directors to issue up to 5,000,000 shares of preferred stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting such series, and fix by resolution, the powers, privileges, preferences and relative, optional or special rights thereof, including liquidation preferences and dividends, and conversion and redemption rights of each such series. As of December 31, 2022, the Company has designated the following class of preferred stock: ● Series A: 1,500,000 authorized shares of Series A Convertible Preferred Stock ● Series B: 200,000 authorized shares of Series B Preferred Stock ● Series B1: 277,921 authorized shares of Series B1 Redeemable Convertible Preferred Stock ● Series B2: 98,685 authorized shares of Series B2 Redeemable Convertible Preferred Stock ● Series B3: 82,814 authorized shares of Series B3 Redeemable Convertible Preferred Stock ● Series B4: 82,814 authorized shares of Series B4 Redeemable Convertible Preferred Stock ● Series Z: 80,656 authorized shares of Series Z Redeemable Convertible Preferred Stock ● Series X: 5 authorized shares of Series X Preferred Stock Series A Convertible Preferred Stock . Series B Preferred Stock On November 17, 2022, the Company’s Board of Directors declared a dividend of one one-thousandth of a share of Series B Preferred Stock, par value $0.01 per share (“ ”), for each outstanding share of the Company’s common stock to stockholders of record at 5:00 p.m. Eastern Time on November 28, 2022 (the “ ”). Each share of Series B Preferred Stock entitled the holder thereof to 1,000,000 votes per share, together with the outstanding shares of the Company’s common stock as a single class, exclusively with respect to certain proposals at the Special Meeting. The holders of the Series B Preferred Stock were not entitled to receive dividends of any kind. All outstanding shares of Series B Preferred Stock were redeemed immediately prior to, or concurrently with, the approval of the Reverse Stock Split Proposal at the Special Meeting. Series B1, B2 , B3 and B4 Convertible Preferred Stock. Series Z Preferred Stock In connection with the Aceragen Acquisition, the Company issued Series Z Preferred Stock. See Note 9 for details on rights and preferences of holders of the Series Z Preferred Stock. Series X Preferred Stock In connection with the Aceragen Acquisition, the Company issued five shares of Series X Preferred Stock. Holders of shares of Series X Preferred Stock are entitled to receive distributions on shares of Series X Preferred Stock as set forth in (a) that certain the Stock and Warrant Purchase Agreement, dated as of March 24, 2021, by and between Legacy Aceragen and NovaQuest, as amended by that Amendment, dated October 25, 2021, and as such agreement may be amended from time to time (the “Purchase Agreement”), and (b) that certain Sales Distribution and PRV Agreement dated as of October 25, 2021 (the “PRV Agreement”). Such distributions include tiered royalty payments on net sales of ACG-801 for Farber disease Common Stock Common Stock Authorized As of December 31, 2022, the Company had 140,000,000 shares of common stock authorized, of which 7,861,082 shares of common stock were reserved for issuance upon the exercise of outstanding warrants and options to purchase common stock, outstanding restricted stock units, the conversion of Series A Preferred Stock, the conversion of Series Z Preferred Stock, and shares available for grant under the Company’s equity incentive and employee stock purchase plans, each more fully described in Note 14. Put Shares Pursuant to the terms of a unit purchase agreement dated as of May 5, 1998, the Company issued and sold a total of 8,821 shares of common stock (the “Put Shares”) at a price of $2,176.00 per share. Under the terms of the unit purchase agreement, the initial purchasers (the “Put Holders”) of the Put Shares have the right (the “Put Right”) to require the Company to repurchase the Put Shares. The Put Right may not be exercised by any Put Holder unless: (1) the Company liquidates, dissolves or winds up its affairs pursuant to applicable bankruptcy law, whether voluntarily or involuntarily; (2) all of the Company’s indebtedness and obligations, including without limitation the indebtedness under the Company’s then outstanding notes, has been paid in full; and (3) all rights of the holders of any series or class of capital stock ranking prior and senior to the common stock with respect to liquidation, including without limitation the Series A convertible preferred stock, have been satisfied in full. The Company may terminate the Put Right upon written notice to the Put Holders if the closing sales price of its common stock exceeds $4,352.00 per share for the twenty As of December 31, 2022, the Company had repurchased or received documentation of the transfer of 2,941 Put Shares and 263 of the Put Shares continued to be held in the name of Put Holders. The Company cannot determine at this time what portion of the Put Rights of the remaining 5,617 Put Shares have terminated. Equity Financings Common Stock Purchase Agreement On March 4, 2019, the Company entered into a Purchase Agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), which was amended on September 2, 2020 (as amended to date, the “LPC Purchase Agreement”), pursuant to which, upon the terms and subject to the conditions and limitations set forth therein, Lincoln Park committed to purchase an aggregate of $35.0 million of shares of Company common stock from time to time at the Company’s sole discretion over a 36-month During the year ended December 31, 2021, the Company sold 47,059 shares pursuant to the LPC Purchase Agreement, resulting in net proceeds of $4.2 million. No shares were sold during the year ended December 31, 2022, prior to the March 4, 2022 expiration of the LPC Purchase Agreement. "At-The-Market" Equity Program In November 2018, the Company entered into an Equity Distribution Agreement (the “ATM Agreement”) with JMP Securities LLC (“JMP”), pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $50.0 million (the “Shares”) through JMP as its agent. Subject to the terms and conditions of the ATM Agreement, JMP will use its commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions, by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, or if specified by the Company, by any other method permitted by law, including but not limited to in negotiated transactions. The Company has no obligation to sell any of the Shares, and the Company or JMP may at any time suspend sales under the ATM Agreement or terminate the ATM Agreement. JMP is entitled to a fixed commission of 3.0% of the gross proceeds from Shares sold. During the year ended December 31, 2021, the Company sold 301,021 Shares pursuant to the ATM Agreement resulting in net proceeds, after deduction of commissions and other offering expenses, of $15.3 million. No Shares were sold during the year ended December 31, 2022. As of December 31, 2022, the Company may sell up to an additional $19.5 million of shares under the ATM Agreement. Common and Preferred Stock Warrants In connection with various financing transactions, the Company has issued warrants to purchase shares of the Company’s common stock and preferred stock. The Company accounts for common stock and preferred stock warrants as equity instruments or liabilities, depending on the specific terms of the warrant agreement. See Note 2 for further details on accounting policies related to the Company’s warrants. In connection with the Aceragen Acquisition, the Company issued warrants to Legacy Aceragen warrant holders to purchase shares of its common stock and Series Z Preferred Stock. The Series Z Preferred Stock warrants are liability classified and remeasured at each reporting period. The following table summarizes outstanding warrants to purchase shares of the Company’s common stock and/or preferred stock as of December 31, 2022 and 2021: Number of Warrants December 31, December 31, Weighted-Average Description 2022 2021 Exercise Price Expiration Date Equity-classified warrants: May 2013 warrants 908 908 $ 1.36 None September 2013 warrants 241 241 $ 1.36 None February 2014 warrants 128 128 $ 1.36 None April 2020 Private Placement first closing warrants 178,794 178,794 $ 38.76 Apr 2023 April 2020 Private Placement second closing warrants 80,801 80,801 $ 46.07 Dec 2023 April 2020 Private Placement second closing warrants — 67,260 $ 0.17 None July 2020 Private Placement first closing warrants — 22,925 $ 0.17 None July 2020 Private Placement first closing warrants 162,601 162,601 $ 43.86 Jul 2023 Assumed Legacy Aceragen common stock warrants 79,596 — $ 7.82 Mar 2031 503,069 513,658 Liability-classified warrants: Assumed Legacy Aceragen Series Z Warrants (1) 14,215 — $ 460.00 Mar 2031 14,215 — Total outstanding 517,284 513,658 The table below is a summary of the Company's warrant activity for the year ended December 31, 2022. Number of Warrants Common Series Z Weighted-Average Warrants Warrants Total Exercise Price (1) Outstanding at December 31, 2021 513,658 — 513,658 $ 21.76 Issued (2) 79,596 14,215 93,811 7.82 Exercised (90,185) — (90,185) 0.17 Expired — — — — Outstanding at December 31, 2022 503,069 14,215 517,284 $ 17.58 (1) Weighted-average exercise price for Series Z Warrants is calculated based on the common stock equivalent shares and exercise price as all Series Z Warrants were automatically converted into warrants to purchase common stock on January 12, 2023. See Note 19. (2) Represents warrants issued in connection with the Aceragen Acquisition. See Note 3. |
Government Contracts Revenue
Government Contracts Revenue | 12 Months Ended |
Dec. 31, 2022 | |
Government Contracts Revenue | |
Government Contracts Revenue | Note 11. Government Contracts Revenue Government contracts revenue for the years ended December 31, 2022 consists of revenue from contracts with customers (U.S. government agencies) accounted for in accordance with ASC Topic 606, as more fully described in Note 2. As of December 31, 2022, the Company had three in-process contracts with various agencies of the U.S. government with a total aggregate contract value of $46.3 million, of which $16.0 million has been used as of December 31, 2022. Of the $30.3 million total contractual value remaining as of December 31, 2022, $30.0 million is related to a contract awarded by Defense Threat Reduction Agency (“DTRA”) to develop ACG-701 as a potential medical countermeasure against the pathogen that causes melioidosis, B. Pseudomallei (the “DTRA Award”). The DTRA Award was granted pursuant to an agreement with a consortium management firm (“CMF”) with a contractual term through December 2026. While the contractual arrangement is with a CMF, the Company has determined that DTRA is the customer in the arrangement and the contract contains a single performance obligation (ACG-801 development services) which meet the criteria to be recognized over time. Other government contracts are not currently material. During the year ended December 31, 2022, the Company recognized government contract revenues of $4.9 million, of which $4.6 million related to the DTRA Award. No such revenues were recognized during the year ended December 31, 2021. As of December 31, 2022, there were no material amounts of remaining performance obligations that are required to be disclosed. |
Clinical Funding, Collaboration
Clinical Funding, Collaboration and License Agreements | 12 Months Ended |
Dec. 31, 2022 | |
Clinical Funding, Collaboration and License Agreements | |
Clinical Funding, Collaboration and License Agreements | Note 12. Clinical Funding, Collaboration and License Agreements Clinical Funding Agreements Cystic Fibrosis Foundation Award In December 2021, the Cystic Fibrosis Foundation (“CFF”) provided Legacy Aceragen a Therapeutic Development Award Agreement (the “CFF Award”) in the amount of $3.5 million, of which $1.0 million had been received as of December 31, 2022. The CFF Award is intended to support the Company’s clinical trial for cystic fibrosis pulmonary exacerbations. The CFF Awards will provide the Company with $2.5 million of additional funding to be paid in line with certain development program milestones anticipated to begin in 2023 and go through 2024. U.S. Government Clinical Funding Contracts The Company is party to contracts with various agencies of the U.S. government which provide funding for the development of certain product candidates as more fully discussed in Note 11. Collaboration Agreement with Scriptr In February 2021, the Company entered into a collaboration and option agreement with Scriptr Global, Inc. (“Scriptr”), pursuant to which (i) Scriptr and the Company will conduct a research collaboration utilizing Scriptr Platform Technology (“SPT”) to identify, research and develop gene therapy candidates (each, a “Collaboration Candidate”) for the treatment, palliation, diagnosis or prevention of (a) myotonic dystrophy type 1 (“DM1 Field”) and (b) Friedreich’s Ataxia (“FA Field”) on a Research Program-by-Research Program basis, as applicable, and (ii) the Company was granted an exclusive option, in its sole discretion, to make effective the Scriptr License Agreement (as defined below) for a given Research Program, as defined below, to make use of Collaboration Candidates and related intellectual property (collectively, the “Scriptr Agreement”). Pursuant to the Scriptr Agreement, Scriptr will use commercially reasonable efforts to carry out research activities set forth in accordance with the applicable DM1 Field and FA Field research plans, including certain pre-clinical proof of concept studies, to identify research Collaboration Candidates utilizing SPT (each, a “Research Program”). Following the completion of activities under a given Research Program, Scriptr will prepare and submit to the Company a comprehensive data package (each, a “Data Package”) that summarizes, on a Research Program-by-Research Program basis, any Collaboration Candidates researched under the Research Program, including any data and results. Upon receipt of a Data Package, the Company has, in its sole discretion, up to two-hundred seventy 270 In partial consideration of the rights granted by Scriptr to Idera under the Scriptr Agreement, the Company made a one-time, non-creditable and non-refundable payment to Scriptr during the first quarter of 2021. In order to fund the Research Programs, the Company will reimburse Scriptr for costs incurred by or on behalf of Scriptr in connection with the conduct of each Research Program during the research term in accordance with the applicable Research Program budget and payment schedule. The Company incurred research and development expenses under the Scriptr Agreement of $0.5 million and $2.1 million during the years ended December 31, 2022 and 2021, respectively. Option and License Agreement with Licensee In April 2019, the Company entered into an amended and restated option and license agreement with a privately-held biopharmaceutical company (“Licensee”), pursuant to which the Company granted Licensee (i) exclusive worldwide rights to develop and market IMO-8400 for the treatment, palliation, and diagnosis of all diseases, conditions, or indications in humans (the “IMO-8400 License”), (ii) an exclusive right and license to develop IMO-9200 in accordance with certain IMO-9200 pre-option exercise protocols (the “IMO-9200 Option Period License”), and (iii) an exclusive one-year option, exercisable at Licensee’s discretion, to obtain the exclusive worldwide rights to develop and market IMO-9200 for the treatment, palliation and diagnosis of all diseases, conditions, or indications in humans (the “IMO-9200 Option”) (collectively, the “Licensee Agreement”). Under the terms of the Licensee Agreement, the Company received upfront, non-refundable fees totaling approximately $1.4 million and ownership of 10% of Licensee’s outstanding common stock, subject to future adjustment, for granting Licensee the IMO-8400 License, the IMO-9200 Option Period License and transfer of related drug materials in 2019. In 2020, the IMO-9200 Option expired and, in 2022, the Licensee Agreement was terminated in its entirety. Accordingly, the Company is no longer eligible to receive any development and sales-based milestone payments and royalties pursuant to the Licensee Agreement. As disclosed above, in connection with the Licensee Agreement, the Company acquired 10% of Licensee’s outstanding common stock, subject to future adjustment. The Company accounted for the investment in accordance with ASC 321, Investments-Equity Securities de minimis |
Restructuring and Other Costs
Restructuring and Other Costs | 12 Months Ended |
Dec. 31, 2022 | |
Restructuring and Other Costs | |
Restructuring and Other Costs | Note 13. Restructuring and Other Costs On September 28, 2022, in connection with the Aceragen Acquisition, the Company determined to restructure its operations and reduce its workforce which resulted in seven positions being eliminated, representing approximately 54% of the Company’s pre-Aceragen Acquisition employees, of which five were eliminated on or before September 28, 2022. All seven of the positions were eliminated by December 31, 2022. In April 2021, in order to align the Company’s workforce with its needs in light of clinical trial outcomes and related shift in focus to business development activities aimed on identifying new portfolio opportunities, the Company determined to restructure its operations and reduce its workforce which resulted in 16 positions being eliminated, representing approximately 50% of the Company’s pre-restructuring employees. As a result of the above restructuring initiatives, the Company incurred restructuring-related charges of $3.7 million and $1.3 million for the years ended December 31, 2022 and 2021, respectively. Restructuring-related charges for both periods which were comprised of one-time termination costs in connection with the reduction-in-workforce, including severance, benefits, and related costs. As of December 31, 2022, the short-term portion of the accrued restructuring balance, or $2.3 million, is included in “Accrued expenses” in the accompanying consolidated balance sheets. The long-term portion of less than $0.1 million is included within “Other liabilities” in the accompanying consolidated balance sheets. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 14. Stock-based Compensation As of December 31, 2022, the only equity compensation plans from which the Company was permitted to issue new awards from was the Company’s 2013 Stock Incentive Plan (as amended to date, the “2013 Plan”) and 2017 Employee Stock Purchase Plan (the “2017 ESPP”), each as more fully described below. Subsequent to December 31, 2022, the Company’s board of directors adopted the 2022 Equity Plan (as defined in Note 19), which was approved by the Company’s stockholders at the Special Meeting on January 12, 2023. Equity Incentive and Employee Stock Purchase Plans 2013 Stock Incentive Plan The Company's board of directors adopted the 2013 Plan, which was approved by the Company’s stockholders effective July 26, 2013. Amendments to the 2013 Plan were approved by the Company’s stockholders in June 2014, June 2015, June 2017, June 2019, and June 2022. The 2013 Plan was intended to further align the interests of the Company and its stockholders with its employees, including its officers, non-employee directors, consultants, and advisers by providing equity-based incentives. The 2013 Plan allows for the issuance of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), other stock-based awards and performance awards. The total number of shares of common stock authorized for issuance under the 2013 Plan is 603,121 shares of the Company’s common stock, plus such additional number of shares of common stock (up to 9,174 shares) as is equal to the number of shares of common stock subject to awards granted under the Company’s 2008 Stock Incentive Plan (the “2008 Plan”), to the extent such awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right. As of December 31, 2022, options to purchase a total of 284,017 shares of common stock and 48,910 unvested RSUs were outstanding, and up to 252,527 shares of common stock remained available for grant under the 2013 Plan. However, on the effective date of the 2022 Equity Plan (as defined in Note 19), all shares remaining available for grant under the 2013 Plan were rolled into the 2022 Equity Plan (as defined in Note 19). Legacy Aceragen 2021 Stock Incentive Plan In accordance with the Merger Agreement, the Company assumed and became the sponsor of the Legacy Aceragen’s 2021 Stock Incentive Plan, as amended (the “Legacy Aceragen Plan”). Under the Merger Agreement, each Legacy Aceragen option that was outstanding and unexercised immediately prior to the effective time of the Aceragen Acquisition was assumed and converted into and became an option to purchase (i) shares of the Company’s common stock (the “Legacy Aceragen Common Options”) and (ii) shares of the Company’s Series Z Preferred Stock (the “Legacy Aceragen Preferred Options”), each on the same terms and conditions as applied to such options immediately prior to the Aceragen Acquisition as adjusted by the exchange ratio pursuant to the Merger Agreement. No additional awards were permitted to be issued from the Legacy Aceragen Plan as of the effective time of the Aceragen Acquisition. Following stockholder approval of the Conversion Proposal, and pursuant to the terms of the Merger Agreement, in January 2023, each Legacy Aceragen Preferred Option became exercisable solely for shares of the Company’s common stock. See Note 19. Other Awards and Inducement Grants The Company has not made any awards pursuant to other equity incentive plans, including the 2008 Plan, since the Company’s stockholders approved the 2013 Plan. As of December 31, 2022, options to purchase a total of 4,908 shares of common stock were outstanding under the 2008 Plan. In addition, as of December 31, 2022, non-statutory stock options to purchase an aggregate of 19,116 shares of common stock were outstanding that were issued outside of the 2013 Plan to certain employees in 2015 and 2014 pursuant to the Nasdaq inducement grant exception as a material component of new hires’ employment compensation. 2017 Employee Stock Purchase Plan The Company’s board of directors adopted the 2017 ESPP which was approved by the Company’s stockholders and became effective June 7, 2017. Amendments to the 2017 ESPP were approved by the Company’s stockholders in June 2019 and June 2022. The 2017 ESPP is intended to qualify as an “employee stock purchase plan” as defined in Section 423 of the Internal Revenue Code of 1986, as amended, and is intended to encourage our employees to become stockholders of ours, to stimulate increased interest in our affairs and success, to afford employees the opportunity to share in our earnings and growth and to promote systematic savings by them. The total number of shares of common stock authorized for issuance under the 2017 ESPP is 59,558 shares of common stock, subject to adjustment as described in the 2017 ESPP. Participation is limited to employees that would not own 5% or more of the total combined voting power or value of the stock of the Company after the grant. As of December 31, 2022, 39,048 shares remained available for issuance under the 2017 ESPP, however, future offering periods have been suspended until further notice. Stock Purchase Plan Administration The 2017 ESPP provides for offerings to employees to purchase common stock with offerings beginning on dates determined by the compensation committee of the board of directors or on the first business day thereafter. Each offering begins a “plan period” during which payroll deductions are to be made and held for the purchase of common stock at the end of the plan period. The compensation committee may, at its discretion, choose a plan period of or less for subsequent offerings and/or choose a different commencement date for offerings. During each plan period participating employees may elect to have a portion of their compensation, ranging from For the years ended December 31, 2022 and 2021, the Company issued 7,788 and 2,889 shares of common stock, respectively, under the 2017 ESPP and received proceeds of less than $0.1 million for each year, as a result of stock purchases. Accounting for Stock-based Compensation The Company recognizes non-cash compensation expense for stock-based awards under the Company’s equity incentive plans and employee stock purchases under the Company’s 2017 ESPP as follows: ● Stock Options: Compensation cost is recognized over an award’s requisite service period, or vesting period, using the straight-line attribution method, based on the grant date fair value determined using the Black-Scholes option-pricing model. ● RSUs: Compensation cost for time-based RSUs, which vest over time based only on continued service, is recognized on a straight-line basis over the requisite service period based on the fair value of the Company’s common stock on the date of grant. Compensation cost for awards that are subject to market considerations is recognized on a straight-line basis over the implied requisite service period, based on the grant date fair value estimated using a Monte Carlo simulation. Compensation cost for awards that are subject to performance conditions is recognized over the period of time commencing when the performance condition is deemed probable of achievement based on the fair value of the Company’s common stock on the date of grant. ● Employee Stock Purchases: Compensation cost is recognized over each plan period based on the fair value of the look-back provision, calculated using the Black-Scholes option-pricing model, considering a 15% discount on shares purchased. Total stock-based compensation expense attributable to stock-based payments made to employees and directors and employee stock purchases included in operating expenses in the Company's statements of operations for the years ended December 31, 2022 and 2021 was as follows: Year Ended December 31, (in thousands) 2022 2021 Stock-based compensation: Research and development Employee Stock Purchase Plan $ 24 $ 28 Equity Incentive Plans 258 546 $ 282 $ 574 General and administrative Employee Stock Purchase Plan $ 5 $ 3 Equity Incentive Plans 1,901 1,960 $ 1,906 $ 1,963 Total stock-based compensation expense $ 2,188 $ 2,537 During the years ended December 31, 2022 and 2021, the weighted average fair market value of stock options granted was $5.88 and $26.18, respectively. Assumptions Used in Determining Fair Value of Stock Options Inherent in the Black-Scholes option-pricing model are the following assumptions: ● Volatility . The Company estimates stock price volatility based on the Company’s historical stock price performance over a period of time that matches the expected term of the stock options. ● Risk-free interest rate . The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption. ● Expected term . The expected term of stock options granted is based on an estimate of when options will be exercised or cancelled in the future. ● Dividend rate. The dividend rate is based on the historical rate, which the Company anticipates will remain at zero . The fair value of each option award at the date of grant was estimated using the Black-Scholes option pricing model. All options granted during the years ended December 31, 2022 and 2021 were granted at exercise prices equal to the fair market value of the common stock on the dates of grant . The following weighted average assumptions apply to the options to purchase 68,796 and 79,784 shares of common stock granted to employees and directors during the years ended December 31, 2022 and 2021, respectively: 2022 2021 Average risk-free interest rate 2.6% 0.4% Expected dividend yield — — Expected lives (years) 3.8 3.6 Expected volatility 104% 94% Weighted average exercise price (per share) $ 8.34 $ 45.56 All options granted during the years ended December 31, 2022 were granted at exercise prices equal to the fair market value of the common stock on the dates of grant . Stock Option Activity The following table summarizes stock option activity for the year ended December 31, 2022. Common Stock Options ($ in thousands, except per share data) Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at December 31, 2021 305,838 $ 137.08 5.9 $ — Granted 68,796 8.34 Assumed in connection with Aceragen Acquisition 111,038 6.22 Exercised — — Forfeited (15,963) 3.27 Expired (63,535) 148.30 Outstanding at December 31, 2022 (1) 406,174 $ 83.00 6.1 $ 102 Exercisable at December 31, 2022 239,866 $ 132.26 4.1 $ 54 Preferred Stock Options ($ in thousands, except per share data) Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at December 31, 2021 — $ — — — Assumed in connection with Aceragen Acquisition 19,826 365.96 Forfeited (2,304) 130.00 Outstanding at December 31, 2022 (1) 17,522 $ 397.02 9.1 $ 1,073 Exercisable at December 31, 2022 5,229 $ 317.43 8.9 $ 568 (1) Includes both vested stock options as well as unvested stock options for which the requisite service period has not been rendered but that are expected to vest based on achievement of a service condition. In March 2021, the Company accelerated the vesting of 90,328 options, which were previously granted from 2019 to 2021. The modification resulted in an insignificant incremental stock-based compensation charge. As of December 31, 2022, there was $3.9 million of unrecognized compensation cost related to unvested options, which the Company expects to recognize over a weighted average period of 2.7 years. Restricted Stock Unit Activity The following table summarizes restricted stock unit activity for the year ended December 31, 2022: Time-based Awards Market/Performance-based Awards Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Nonvested shares at December 31, 2021 4,039 $ 39.10 29,814 $ 26.14 Granted 16,657 6.79 — — Cancelled — — — — Vested (1,600) 41.36 — — Nonvested shares at December 31, 2022 19,096 $ 10.73 29,814 $ 26.14 Time-based Restricted Stock Units In March 2021, the Company accelerated the vesting of 8,110 unvested time-based RSUs which were previously granted in 2019 and 2020. The modification resulted in an insignificant incremental stock-based compensation charge on the modification date. During the years ended December 31, 2022 and 2021, the Company recognized $0.7 million and $0.3 million of compensation expense related to modified time-based RSUs that would have vested under the original terms of the award. As of December 31, 2022, there was less than $0.1 million of unrecognized compensation cost related to the Company’s time-based RSUs, which is expected to be recognized over a weighted average period of 0.8 years. Market/Performance-based Restricted Stock Units In July 2020, the Company granted RSUs to certain employees, including executive officers, under the 2013 Plan, with vesting that may occur upon a combination of specific performance and/or market conditions. Accordingly, the Company views these RSUs as two separate awards: (i) an award that vests if the market condition is achieved, and (ii) an award that vests whether or not the market condition is achieved, so long as the performance condition is achieved. The Company recognized compensation expense for these awards over the estimated requisite service period of 2.36 years based on the estimated fair value when considering the market condition of the award, which was determined using a Monte Carlo simulation. During the year ended December 31, 2022, the Company recognized $0.3 million of compensation expense related to these awards. As of December 31, 2022, there was no remaining unrecognized compensation cost for the market-based component of these awards. However, should the performance condition be achieved, the Company would recognize an additional $0.3 million of compensation expense. Restricted Stock Activity The following table summarizes restricted stock activity for the year ended December 31, 2022: Number of Shares Common Stock Series Z Nonvested shares at December 31, 2021 — — Issued in connection with Aceragen Acquisition (1) 16,763 2,993 Cancelled — — Vested (1,331) (237) Nonvested shares at December 31, 2022 15,432 2,756 (1) Issued in connection with Aceragen Acquisition to Legacy Aceragen shareholders as part of the merger consideration which include time-based vesting restrictions. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 15. Commitments and Contingencies Lease Commitments As of December 31, 2022, the Company’s leased assets primarily consisted of its office headquarters in Exton, Pennsylvania. During each of the years ended December 31, 2022 and 2021, rent expense, including real estate taxes, totaled approximately $0.4 million. The leases are classified as operating leases. Future minimum commitments as of December 31, 2022 under the Company’s lease agreements are approximately: December 31, Operating Leases (in thousands) 2023 $ 285 2024 240 2025 101 Total lease payments $ 626 Less: imputed interest (66) Total present value of lease liabilities $ 560 The Company entered into the Exton, Pennsylvania facility lease on April 1, 2015, which was subsequently amended on September 23, 2015 to include additional space. The Company currently leases approximately 11,000 square feet of office space at its Exton facility. The lease expires on May 31, 2025. Employee Benefit Plans Through December 31, 2022, the Company had an employee benefit plan under Section 401(k) of the Internal Revenue Code of 1986, as amended, which allowed eligible employees to make contributions up to a specified percentage of their compensation. Under the plan, the Company matched up to 5% of base salary, by matching 100% of the first 5% of base salary contributed by each employee. Additionally, in connection with the Aceragen Acquisition, the Company assumed Legacy Aceragen’s pooled employer benefit plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (“Aceragen Pooled Plan”), which allows employees to make contributions up to a specified percentage of their compensation. Under the Aceragen Pooled Plan, the Company matches 100% of the first 3% of employee eligible compensation, as defined, contributed to the Aceragen Pooled Plan and 50% of the next 2% of the employee eligible compensation contributed to the Aceragen Pooled Plan. The Aceragen Pooled Plan was effective for Legacy Aceragen employees only through December 31, 2022. Effective January 1, 2023, the Company adopted the Aceragen Pooled Plan for all of its employees. Total matching contributions for the years ended December 31, 2022 and 2021 was approximately $0.2 million and $0.3 million, respectively. Contingent Severance and Retention Payments In connection with the Aceragen Acquisition, the Company entered into transition and separation agreements with two former executives and retention agreements with three retained executives. These arrangements include certain compensation totaling $2.7 million in the aggregate to be paid to such executives in the form of stock and/or cash contingent on certain events occurring, including obtaining certain shareholder approvals at the Special Meeting for terminated executives and termination of employment within six months from the date of the Special Meeting for retained employees. As none of these contingencies were probable of occurring as of December 31, 2022, no expenses have been recognized in the consolidated statements of operations. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | Note 16. Income Taxes As of December 31, 2022 and 2021, the significant components of the Company’s deferred tax assets and liabilities after applying the enacted corporate tax rates are approximately as follows: (in thousands) 2022 2021 Deferred tax assets: Operating loss carryforwards $ 94,356 $ 90,550 Tax credit carryforwards 29,988 28,226 Stock-based compensation 4,959 6,902 Capitalized research and development 11,287 7,818 Lease liabilities 141 220 Other 459 70 Total deferred tax assets $ 141,190 $ 133,786 Deferred tax liabilities: Right-of-use asset $ (134) $ (213) In-process research and development intangible assets (15,312) — Total deferred tax liabilities $ (15,446) $ (213) Valuation allowance $ (129,027) $ (133,573) Net deferred tax assets (liabilities) $ (3,283) $ — The Company has provided a full valuation allowance for its deferred tax asset as of December 31, 2021 due to the uncertainty surrounding the ability to realize these assets. At December 31, 2022, the Company evaluated the realizability of its deferred tax assets and determined that the valuation allowance should be decreased by approximately $6.3 million primarily for consideration of the acquired in-process research and development intangible assets. An income tax benefit for the year ended December 31, 2022 is reflected in the consolidated statement of operations. The difference between the U.S. federal corporate tax rate and the Company’s effective tax rate for the years ended December 31, 2022 and 2021 are as follows: 2022 2021 Expected federal income tax rate (21.0) % (21.0) % State income taxes, net of federal benefit 1.7 2.1 Federal and state credits (4.2) 1.7 Reduction of state income tax rate 14.9 — Warrant and future tranche right revaluation gain (0.3) 26.9 Series X revaluation loss 1.7 — Stock-based compensation 4.6 — Other 1.7 (0.4) Change in valuation allowance (20.4) (9.3) Effective tax rate (21.3) % 0.0 % The components of income tax benefit are as follows: (in thousands) 2022 2021 Current: Federal $ — $ — State — — $ — $ — Deferred: Federal $ (6,318) $ — State — — $ (6,318) $ — Total Income Tax Benefit $ (6,318) $ — As of December 31, 2022, the Company had cumulative federal, various state, and Switzerland net operating loss carryforwards (“NOLs”) of approximately $355.8 million, $362.7 million, and $0.9 million, respectively, available to reduce federal, state and foreign taxable income, respectively. As a result of the Tax Cuts and Jobs Act of 2017, federal net operating losses incurred for taxable years beginning after January 1, 2018 have an unlimited carryforward period, but can only be utilized to offset 80% of taxable income in future taxable periods. Of the $355.8 million of federal NOLs, $158.4 million have an unlimited carryforward and the remaining NOLs are subject to expiration through 2037. In addition, at December 31, 2022, the Company had cumulative federal and state tax credit carryforwards of $28.3 million and $1.9 million, respectively. The federal credits expire through 2042 and the state credits expire through 2033. Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, prescribe limitations on the amount of NOLs and tax credit carryforwards that may be utilized in any one year. Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. The ownership changes have and will continue to subject the Company’s pre-ownership change NOL carryforwards to an annual limitation, which will significantly restrict the Company’s ability to use them to offset taxable income in periods following the ownership change In conjunction with the Aceragen Acquisition, the Company acquired Legacy Aceragen’s federal, various state, and Switzerland NOL’s of $8.1 million, $19.1 million, and $0.8 million, respectively. The Company applies ASC 740-10, Accounting for Uncertainty in Income Taxes, an interpretation of ASC 740 The Company files income tax returns in the U.S., various states, and Switzerland and is subject to examination in each of these jurisdictions. The Company’s tax years in the US are open under statute from inception to present. All open years may be examined to the extent that tax credits or net operating loss carry forwards are used in future periods. The Company does not expect any material increase or decrease in its income tax expense, in the next twelve months, related to examinations or changes in uncertain tax positions. The Company’s policy is to record interest and penalties on uncertain tax positions as general and administrative expense. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | Note 17. Related Party Transactions Pillar Investment Entities Youssef El Zein, a member of the Company’s Board of Directors until his resignation in October 2017, is a director and controlling stockholder of Pillar Invest Corporation (“Pillar Invest”), which is the general partner of Pillar Pharmaceuticals I, L.P., Pillar Pharmaceuticals II, L.P., Pillar Pharmaceuticals III, L.P., Pillar Pharmaceuticals IV, L.P., Pillar Pharmaceuticals V, L.P., Pillar 6, Pillar 7 and Pillar Partners (collectively, the “Pillar Investment Entities”). As of December 31, 2022, the Pillar Investment Entities beneficially owned 985,204 shares of the Company's common stock. During the year ended December 31, 2021, certain of the Pillar Investment Entities exercised warrants to purchase 185,787 shares of the Company’s common stock at an exercise price of $0.17 per share for a total exercise price of less than $0.1 million. A total of 1,121 shares were used as cashless shares to cover the exercise costs. During the year ended December 31, 2022, certain of the Pillar Investment Entities exercised warrants to purchase 90,186 shares of the Company’s common stock at an exercise price of $0.17 per share for a total exercise price of less than $0.1 million. As of December 31, 2022, the Pillar Investment Entities held (i) warrants to purchase up to 178,794 shares of the Company’s common stock at an exercise price of $38.76 per share, (ii) warrants to purchase up to 162,601 shares of the Company’s common stock at an exercise price of $43.86 per share, and (iii) warrants to purchase up to 80,801 shares of the Company’s common stock at an exercise price of $46.07 per share. NovaQuest Ron Wooten, a member of the Company’s Board of Directors, is a member of the investment committee of NQ POF V GP, Ltd. ("NovaQuest GP"), which is the general partner of NovaQuest Co-Investment Fund XV, L.P. (“NovaQuest”). In connection with the Aceragen Acquisition, NovaQuest was issued five shares of Series X Preferred Stock and is entitled to receive distributions on shares of Series Z Preferred Stock, as more fully described in Note 10. In addition, all outstanding warrants to purchase Legacy Aceragen common stock held by NovaQuest immediately prior to the Aceragen Acquisition were assumed by the Company and converted into warrants to purchase shares of the Company’s common stock and Series Z Preferred Stock on terms substantially identical to those in effect prior to the Aceragen Acquisition, except for adjustments to the underlying number of shares and the exercise price based on the Merger Agreement exchange ratio. As of December 31, 2022, NovaQuest held five shares of Series X Preferred Stock, warrants to purchase 79,032 shares of the Company’s common stock, and warrants to purchase 14,115 shares of Series Z Preferred Stock. Agreement with Dr. Atul Chopra In March 2021, Legacy Aceragen entered into a consulting agreement with Dr. Atul Chopra, a founder and a member of Legacy Aceragen’s board of directors, pursuant to which Dr. Chopra provides consulting and advisory services in exchange for (i) $16,667 per month and (ii) a right to purchase 1,000,000 fully vested shares of Legacy Aceragen’s common stock at a price equivalent to par value $0.001 per share. Subsequent to the executed consulting agreement, Dr. Chopra purchased all 1,000,000 shares, which were converted into shares of the Company’s common stock and Series Z Preferred Stock in connection with the Aceragen Acquisition based on the Merger Agreement exchange ratio. The term of the consulting agreement was to remain in effect for a period of one year and automatically renew for successive one-year terms until terminated. At the effective time of the Aceragen Acquisition, the consulting agreement was terminated. Since March 2021 (inception of consulting agreement) through the termination of the agreement, Dr. Chopra received $0.3 million in consulting fees pursuant to the agreement. As of December 31, 2022, Dr. Chopra owned 127,718 shares of the Company’s common stock and 22,810 shares of Series Z Preferred Stock, which in January automatically converted into 1,341,764 shares of the Company’s common stock. Following the conversion of the Series Z Preferred Stock, Dr. Chopra owned Board Fees Paid in Stock Pursuant to the Company’s director compensation program, in lieu of director board and committee fees of $0.1 million during each of the years ended December 31, 2022 and 2021, the Company issued 10,781 and 16,221 shares of common stock, respectively, to certain of its directors. Director board and committee fees are paid in arrears and the number of shares issued was calculated based on the market closing price of the Company’s common stock on the issuance date. |
Net Income (Loss) per Common Sh
Net Income (Loss) per Common Share Applicable to Common Stockholders | 12 Months Ended |
Dec. 31, 2022 | |
Net Income (Loss) per Common Share Applicable to Common Stockholders | |
Net Income (Loss) per Common Share Applicable to Common Stockholders | Note 18. Net Income (Loss) per Common Share Applicable to Common Stockholders Details in the computation of basic and diluted net income (loss) per common share were as follows: Year Ended December 31, ($ in thousands except share and per share data) 2022 2021 Net (loss) income per share — Basic: Net (loss) income $ (23,360) $ 98,091 Less: Undistributed earnings to preferred stockholders — (1,150) Net (loss) income applicable to common stockholders - basic $ (23,360) $ 96,941 Numerator for basic net (loss) income applicable to common stockholders $ (23,360) $ 96,941 Denominator for basic net (loss) income applicable to common stockholders 3,255,648 2,894,287 Net (loss) income applicable to common stockholders - basic $ (7.18) $ 33.49 Net (loss) income per share — Diluted: Net (loss) income applicable to common holders - basic $ (23,360) $ 96,941 Less: Warrant revaluation gain applicable to dilutive liability-classified warrants — (6,983) Less: Future tranche right revaluation gain applicable to dilutive liability-classified future tranche rights — (118,803) Numerator for diluted net (loss) income applicable to common stockholders $ (23,360) $ (28,845) Denominator for basic net (loss) income applicable to common stockholders 3,255,648 2,894,287 Plus: Incremental shares underlying “in the money” liability-classified warrants outstanding — 5,492 Plus: Incremental shares underlying “in the money” liability-classified future tranche rights outstanding — 48,880 Denominator for diluted net income (loss) applicable to common stockholders 3,255,648 2,948,659 Net (loss) income applicable to common stockholders - diluted $ (7.18) $ (9.78) T otal antidilutive securities (or their common stock equivalent, where applicable) excluded from the calculation of diluted net loss per share for the years ended December 31, were as follows: Year Ended December 31, 2022 2021 Common stock options 406,174 306,000 Preferred stock options 1,030,693 — Restricted stock units and restricted stock awards 226,460 33,865 Common stock warrants 503,069 513,661 Preferred stock warrants 836,176 — Convertible preferred stock 4,582,364 14 Total 7,584,936 853,540 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events. | |
Subsequent Events | Note 19. Subsequent Events The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. In some instances, such subsequent events may require retroactive adjustment to information reported at the balance sheet date. Conversion of Series Z Preferred Stock On January 12, 2023, at the Special Meeting, the Company’s stockholders approved the issuance of shares of the Company’s common stock upon conversion of the Series Z Preferred Stock in accordance with Nasdaq Listing Rule 5635(a). Following approval, Reverse Stock Split On January 12, 2023, at the Special Meeting, the Company’s stockholders approved an amendment to the Company’s Restated Certificate of Incorporation, as amended, to effect a reverse stock split of the Company’s issued and outstanding common stock by a whole number ratio to be determined by the Company board of directors within a range of one -for-seventeen (1:17) and one -for-twenty-three (1:23) (or any number in between), to be effected in the sole discretion of the Company’s board of directors at any time within one year of the date of the Special Meeting. On January 17, 2023, the Company implemented a one -for-seventeen (1:17) 2022 Equity Plan On January 12, 2023, at the Special Meeting, the Company’s stockholders approved the Idera Pharmaceuticals, Inc. 2022 Stock Incentive Plan (the “2022 Equity Plan”). The 2022 Equity Plan provides for the issuance of incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights, and other stock-based awards. The 2022 Equity Plan was adopted principally to serve as a successor plan to the 2013 Plan and to increase the number of shares of the Company’s common stock reserved for equity-based awards by an amount equal effective date of the 2022 Equity Plan. January 2023 Convertible Notes Pursuant to the terms of the Term Sheet, on January 31, 2023, the Company issued 12% convertible unsecured promissory notes (the “Convertible Notes”) to certain of the Former Stockholders in an aggregate amount of approximately $5.9 million. The Convertible Notes bear annual interest at 12% . Under the terms of the Convertible Notes, at the holder’s election, any or all of the outstanding principal and accrued interest may be converted into shares of Company’s common stock using a conversion price determined by the VWAP (as defined in the Convertible Notes) on the applicable trading market for the fifteen consecutive trading days ending prior to the date the holder provides notice of their intent to convert. The terms of the Convertible Notes provide the Former Stockholders with customary registration rights covering the Common Stock issued following any conversion of the Convertible Notes. Silicon Valley Bank Closure Silicon Valley Bank (“SVB”) was closed on March 10, 2023 by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. At the time of closing, the Company had approximately 56% of its cash and cash equivalent balances in segregated custodial accounts held by a third-party custodian for which SVB was the Company’s agent and/or SVB Asset Management, an affiliate of SVB, is the advisor. The Company’s investment portfolio currently does not contain any securities of SVB. On March 12, 2023, the U.S. Treasury, Federal Reserve, and FDIC announced that SVB depositors would have access to all of their money starting March 13, 2023 and the Company has received such access. The Company does not believe it will be impacted by the closure of SVB and will continue to monitor the situation as it evolves. Cost-reduction Plan Implementation On April 13, 2023, the Board approved certain cost-cutting measures with a view to preserving capital to support the Company’s continuing operations. As part of this plan, the Company has commenced the furlough of 12 employees, representing approximately 46% of its workforce. Additionally, certain of the Company’s employees and executive officers will defer portions of their respective base salaries in amounts that exceed $200,000, with such deferrals having a retroactive effective date of April 5, 2023. The Company will continue continue to review operations for other opportunities to reduce costs and pursue financing opportunities. For more information, please see Item 9B of this Form 10-K. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Aceragen, LLC, including Aceragen, LLC’s wholly owned subsidiaries, Arrevus, Inc., a Delaware Corporation (“Arrevus”), and Aceragen GmbH, a limited liability company (“AGmbH”). All intercompany accounts and transactions have been eliminated in consolidation. The Company has determined the functional currency of AGmbH to be the Swiss Franc. The Company translates assets and liabilities of AGmbH’s operations at exchange rates in effect at the balance sheet date |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgements, and assumptions that affect the reported amounts of assets and liabilities at the date of consolidated financial statements and reported amounts of revenues and expenses during the reporting period, and related disclosure of contingencies in the accompanying consolidated financial statements and these notes. In addition, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from these estimates. |
Segment Information | Segment Information Operating segments are defined as components of an enterprise in which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and assessing performance. The Company views its operations and manages its business as one operating segment, which is the business of developing novel therapeutics for rare diseases. |
Financial Instruments | Financial Instruments The fair value of the Company’s financial instruments is determined and disclosed in accordance with the three-tier fair value hierarchy specified in Note 4. The Company is required to disclose the estimated fair values of its financial instruments. As of December 31, 2022, the Company’s financial instruments included cash and cash equivalents, accounts receivable, accounts payable, Acquisition Obligation (defined below), and Series X Preferred Stock and Series Z Preferred Stock Warrant liabilities. As of December 31, 2021, the Company’s financial instruments consisted of cash and cash equivalents. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash, which, at times, may exceed federally insured limits, and cash equivalents consisting of investments in money market funds managed by a variety of financial institutions. The Company's credit risk is managed by investing in only highly rated money market instruments. As a result, no significant additional credit risk is believed by management to be inherent in the Company’s assets and the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk on such accounts. As of December 31, 2022, the Company’s cash and cash equivalents were held at six financial institutions. As more fully described in Note 19, “Subsequent Events” the Company had approximately 56% of its cash and cash equivalent balances in segregated custodial accounts held by a third-party custodian for which SVB (as defined below) was the Company’s agent and/or SVB Asset Management, an affiliate of SVB, was the advisor at the time SVB was closed. The Company does not believe it will be impacted by the closure of SVB. |
Business Combinations | Business Combinations The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business. If determined to be a business combination, the Company accounts for the transaction under the acquisition method of accounting as indicated in ASU 2017-01, Business Combinations (ASC 805) Business Combinations |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of 90 days or less when purchased to be “cash equivalents.” Cash and cash equivalents at December 31, 2022 and 2021 consisted of cash and money market funds. |
Accounts Receivable | Accounts Receivable The U.S. Government accounted for all of the Company’s accounts receivable as of December 31, 2022. Accordingly, the Company does not expect any credit losses with respect to its accounts receivable and no credit losses have been incurred to date. Included in accounts receivable at December 31, 2022 is $0.4 million of unbilled receivables which relates to revenue recognized for work that has been performed but the invoicing has not yet occurred as of the reporting date. |
Property and Equipment | Property and Equipment Property and equipment are carried at acquisition cost less accumulated depreciation, subject to review for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable as described further under the heading "Impairment of Long-Lived Assets" below. The cost of normal, recurring, or periodic repairs and maintenance activities related to property and equipment are expensed as incurred. The cost for planned major maintenance activities, including the related acquisition or construction of assets, is capitalized if the repair will result in future economic benefits. Depreciation and amortization are computed using the straight-line method based on the estimated useful lives of the related assets. Leasehold improvements are amortized over the remaining lease term or the related useful life, if shorter. Equipment and other long-lived assets are depreciated over three When an asset is disposed of, the associated cost and accumulated depreciation is removed from the related accounts on the Company's balance sheet with any resulting gain or loss included in the Company's consolidated statement of operations. |
Indefinite-Lived Intangible Assets | Indefinite-Lived Intangible Assets Indefinite-lived intangible assets consist of In-Process Research and Development (“IPR&D”). The fair values of IPR&D project assets acquired in business combinations are capitalized. The Company generally utilizes the Multi-Period Excess Earning Method to determine the estimated fair value of the IPR&D assets acquired in a business combination. The projections used in this valuation approach are based on many factors, such as relevant market size, the estimated probability of regulatory success rates, anticipated patent protection, expected pricing, expected treated population, and estimated payments (e.g., royalty). The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets are amortized over the remaining useful life or written off, as appropriate. Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company considers many factors in evaluating whether the value of our intangible assets with indefinite lives may not be recoverable, including, but not limited to, expected growth rates, the cost of equity and debt capital, general economic conditions, our outlook and market performance of our industry and recent and forecasted financial performance. The Company evaluates indefinite-lived intangible assets for impairment at least annually on October 1 and whenever facts and circumstances indicate that their carrying amounts may not be recoverable. For the year ended December 31, 2022, the Company determined that there was no impairment to IPR&D. |
Goodwill | Goodwill Goodwill represents the amount of consideration paid in excess of the fair value of net assets acquired as a result of the Company’s business acquisitions accounted for using the acquisition method of accounting. The intangible assets acquired represented the fair value of IPR&D which has been recorded on the accompanying consolidated balance sheet as indefinite-lived intangible assets. A deferred tax liability was recorded for the difference between the fair value of the acquired IPR&D and its tax basis which was recognized as goodwill in applying the purchase method of accounting. Goodwill is not amortized and is subject to impairment testing at a reporting unit level on an annual basis or when a triggering event occurs that may indicate the carrying value of the goodwill is impaired. An entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The Company evaluates goodwill for impairment at least annually on October 1 and whenever facts and circumstances indicate that their carrying amounts may not be recoverable. For the year ended December 31, 2022, the Company determined that there was no impairment to goodwill. |
Operating Lease Right-of-use Asset and Lease Liability | Operating Lease Right-of-use Asset and Lease Liability The Company accounts for leases under ASC 842, Leases Property, Plant, and Equipment As of December 31, 2022 and 2021, the Company’s operating lease ROU assets and corresponding short-term and long-term lease liabilities primarily relate to its existing Exton, Pennsylvania facility operating lease, which expires on May 31, 2025. In connection with the Aceragen Acquisition, the Company acquired an operating lease for an office in Basel, Switzerland, which expired on March 31, 2023. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets In accordance with ASC 360-10-35, Impairment or Disposal of Long-Lived Assets |
Warrant Liability | Warrant Liability The Company accounts for stock warrants as either equity instruments, liabilities or derivative liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity Derivatives and Hedging In connection with the Aceragen Acquisition, a portion of the consideration paid to Legacy Aceragen warrant holders was in the form of warrants to purchase shares of Series Z Preferred Stock (“Series Z Warrants”). Such warrants were classified as liabilities upon issuance and as of December 31, 2022 because the underlying Series Z Preferred Stock is contingently redeemable. The fair value of the Series Z Warrants on the date of issuance was recorded as a component to the carrying value of the shares Series Z Preferred Stock and as a long-term liability in the consolidated balance sheets. The Series Z Warrants are remeasured to fair value at each balance sheet date until the warrants are exercised, reclassified, expire, or otherwise settled. Changes in the fair values of the Series Z Warrants are recognized as other income or expense in the consolidated statements of operations and comprehensive loss. See Notes 3, 4, and 9 to these consolidated financial statements for further details. |
Redeemable Preferred Stock | Redeemable Preferred Stock The Company applies ASC 480 when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity. See Notes 8, 9 and 10 to these consolidated financial statements. |
Series X Preferred Stock Liability | Series X Preferred Stock Liability In conjunction with the Aceragen Acquisition, the Company evaluated the newly issued Series X Preferred Stock and determined its revised terms represents a sale of future revenues and is classified as a liability under ASC 470, Debt |
Future Tranche Right Liability and Revaluation Gain | Future Tranche Right Liability and Revaluation Gain The December 2019 Securities Purchase Agreement (as defined in Note 9) contained call options on redeemable preferred shares with warrants (conditionally exercisable for shares that are puttable). The Company determined that these call options represent freestanding financial instruments and accounted for the options as liabilities under ASC 480, which required the measurement and recognition of the fair value of the liability at the time of issuance and at each reporting period until such call options were exercised or cancelled. During the year ended December 31, 2021, the liability-classified call options provided for under the December 2019 Securities Purchase Agreement terminated and, accordingly, the liability balance was derecognized resulting in a future tranche right revaluation gain recorded in the Company’s statements of operations. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers ● identify the contract(s) with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to the performance obligations in the contract; and ● recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it determines that it is probable it will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Amounts received prior to satisfying the revenue recognition criteria are recognized as deferred revenue in the Company’s balance sheet. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current portion of deferred revenue. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion. Government Contract Revenue Revenues from reimbursable contracts are recognized as costs are incurred, generally based on allowable direct costs incurred during the period, plus allocable overheads together with any recognizable earned fee. The Company uses this output method to measure progress as the customer has access to the development research under these projects and benefits incrementally as research and development activities occur. See Note 11, “Government Contracts Revenue,” of the notes to these consolidated financial statements for discussion of the Company’s cost reimbursement contracts. Other Revenues Certain of the Company’s collaborative research, development, and/or commercialization agreements may result in the recognition of revenue for one or more of the following: nonrefundable, up-front license fees; research, development, and commercial milestone payments; and other contingent payments due based on the activities of the counterparty or the reimbursement by licensees of costs associated with patent maintenance. See Note 12, “Clinical Funding, Collaboration and License Agreements,” of the notes to these consolidated financial statements for additional details regarding the Company’s collaboration and out-licensing arrangements. Customer Concentration Risk The U.S. Government accounted for all of the Company’s revenues for the year ended December 31, 2022. |
Research and Development Prepayments, Accruals and Related Expenses | Research and Development Prepayments, Accruals and Related Expenses All research and development expenses are expensed as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including drug development trials and studies, research collaborations, drug manufacturing, laboratory supplies, external research, payroll including stock-based compensation and overhead. The Company is required to estimate our accrued and prepared expenses for research and development activities performed by third parties, including Clinical Research Organizations (“CROs”) and clinical investigators. These estimates are made as of the reporting date of the work completed over the life of the individual study in accordance with agreements established with CROs and other clinical sites. Some CROs invoice the Company on a monthly basis, while others invoice upon the achievement of milestones. The Company determines the estimates of research and development activities incurred at the end of each reporting period through discussion with internal personnel, outside service providers, and research collaboration partners as to the progress or stage of completion of trials or services, as of the end of the reporting period, pursuant to contracts with clinical trial centers or CROs and the agreed upon fee to be paid for such services. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are accepted by the Company or the services are performed. As of December 31, 2022 and 2021, the Company recorded approximately $0.6 million and $0.9 million, respectively, as prepaid research and development, which is included within prepaid expenses and other current assets in the accompanying balance sheets. |
Acquisition-Related Costs | Acquisition-Related Costs Acquisition-related costs include direct expenses incurred in connection with the Aceragen Acquisition, as well as integration-related professional fees and other incremental costs directly associated to the Aceragen Acquisition. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation using ASC 718, Compensation – Stock Compensation Equity – Equity Based Payments to Non-Employees The Company recognizes all share-based payments to employees and directors as expense in the statements of operations based on their fair values. The Company records compensation expense on a straight-line basis over an award’s requisite service period, or vesting period, based on the award’s fair value at the date of grant. Vesting for time-based options and restricted stock units is generally four years for employees and one year for directors. The Company uses a Black-Scholes option-pricing model to determine the fair value of each option grant as of the date of grant for expense incurred. The Black-Scholes option pricing model requires inputs for risk-free interest rate, dividend yield, expected stock price volatility and expected term of the options. Forfeitures are accounted for as they occur. See Note 14, “Stock-based Compensation,” for additional details. |
Income Taxes | Income Taxes An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by a net operating loss carryover. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. In the event the Company is charged interest or penalties related to income tax matters, the Company would record such interest as interest expense and would record such penalties as other expense in the Statements of Operations. No such charges have been incurred by the Company. For each of the years ended December 31, 2022 and 2021, the Company had no uncertain tax positions. See Note 16, “Income Taxes,” for additional details. |
Net Income (Loss) per Common Share applicable to Common Stockholders | Net Income (Loss) per Common Share Applicable to Common Stockholders The Company uses the two-class method to compute net income per common share during periods the Company realizes net income and has securities outstanding (e.g., redeemable convertible preferred stock) that entitle the holder to participate in dividends and earnings of the Company. In addition, the Company analyzes the potential dilutive effect of outstanding redeemable convertible preferred stock under the "if-converted" method when calculating diluted earnings per share and reports the more dilutive of the approaches (two class or "if-converted"). The two-class method is not applicable during periods with a net loss, as the holders of the redeemable convertible preferred stock have no obligation to fund losses. The Company also analyzes the potential dilutive effect of outstanding stock options, unvested restricted stock and restricted stock units, warrants and shares underlying future tranche rights under the treasury stock method (as applicable), during periods of income, or during periods in which income is recognized related to changes in fair value of its liability-classified securities. |
New Accounting Pronouncements | New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB and rules are issued by the Securities and Exchange Commission (“SEC”) that the Company has or will adopt as of a specified date. Unless otherwise noted, management does not believe that any other recently issued accounting pronouncements issued by the FASB or guidance issued by the SEC had, or is expected to have, a material impact on the Company’s present or future financial statements. |
Income Tax Uncertainties | As of December 31, 2022, the Company had cumulative federal, various state, and Switzerland net operating loss carryforwards (“NOLs”) of approximately $355.8 million, $362.7 million, and $0.9 million, respectively, available to reduce federal, state and foreign taxable income, respectively. As a result of the Tax Cuts and Jobs Act of 2017, federal net operating losses incurred for taxable years beginning after January 1, 2018 have an unlimited carryforward period, but can only be utilized to offset 80% of taxable income in future taxable periods. Of the $355.8 million of federal NOLs, $158.4 million have an unlimited carryforward and the remaining NOLs are subject to expiration through 2037. In addition, at December 31, 2022, the Company had cumulative federal and state tax credit carryforwards of $28.3 million and $1.9 million, respectively. The federal credits expire through 2042 and the state credits expire through 2033. Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, prescribe limitations on the amount of NOLs and tax credit carryforwards that may be utilized in any one year. Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. The ownership changes have and will continue to subject the Company’s pre-ownership change NOL carryforwards to an annual limitation, which will significantly restrict the Company’s ability to use them to offset taxable income in periods following the ownership change In conjunction with the Aceragen Acquisition, the Company acquired Legacy Aceragen’s federal, various state, and Switzerland NOL’s of $8.1 million, $19.1 million, and $0.8 million, respectively. The Company applies ASC 740-10, Accounting for Uncertainty in Income Taxes, an interpretation of ASC 740 |
Business Acquisition (Tables)
Business Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Acquisition | |
Schedule of purchase price consideration | (In thousands) Common stock issued to Aceragen stockholders $ 2,809 Series Z issued to Aceragen stockholders (Note 9) 25,085 Series X liability in connection with Aceragen Acquisition (Note 8) 31,900 Stock options, restricted stock and warrants allocated to consideration paid 5,822 Total Consideration paid $ 65,616 |
Summary of preliminary allocation of the purchase price to the assets acquired and liabilities assumed | (In thousands) Assets acquired: Cash and cash equivalents $ 5,482 Receivables 1,914 Prepaid expenses and other assets 575 In-process research and development assets 71,600 Goodwill 11,100 $ 90,671 Liabilities assumed: Accounts Payable and accrued expenses $ 7,886 Acquisition Obligation (Note 7) 7,546 Operating lease liabilities 22 Deferred tax liabilities 9,601 $ 25,055 Net assets acquired $ 65,616 |
Schedule of intangible assets acquired in connection with the Aceragen Acquisition | Carrying Value as of Acquisition Date December 31, (In thousands) Fair Value Impairment 2022 ACG-701 for Cystic Fibrosis $ 50,700 $ — $ 50,700 ACG-701 for Melioidosis 14,900 — 14,900 ACG-801 for Farber Disease 6,000 — 6,000 Total in-process research and development costs (IPR&D) $ 71,600 $ — $ 71,600 |
Schedule of pro forma financial information | December 31, (In thousands) 2022 2021 Net revenues $ 18,196 $ 1,005 Net (loss) income $ (35,379) $ 80,502 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements | |
Schedule of assets and liabilities measured and recorded in financial statements at fair value on a recurring basis | December 31, 2022 (In thousands) Total Level 1 Level 2 Level 3 Assets Cash $ 3,342 $ 3,342 $ — $ — Cash equivalents – money market funds 8,702 8,702 — — Total assets $ 12,044 $ 12,044 $ — $ — Liabilities Warrant liability $ 2,819 $ — $ — $ 2,819 Series X Preferred Stock liability 34,300 — — 34,300 Total liabilities $ 37,119 $ — $ — $ 37,119 December 31, 2021 (In thousands) Total Level 1 Level 2 Level 3 Assets Cash $ 250 $ 250 $ — $ — Cash equivalents – money market funds 32,295 32,295 — — Total assets $ 32,545 $ 32,545 $ — $ — |
Schedule of reconciliation measured at fair value on a recurring basis using unobservable inputs | Series X Warrant Preferred Stock (In thousands) Liability Liability Balance, December 31, 2021 $ — $ — Issuance in connection with the Aceragen Acquisition 3,180 31,900 Change in fair value (361) 2,400 Balance, December 31, 2022 $ 2,819 $ 34,300 |
Warrant liability | |
Fair Value Measurements | |
Schedule of assumptions used in determining fair value | December 31, 2022 Risk-free interest rate 4.09% Expected dividend yield — Expected term (years) 4.1 Expected volatility 104% Stock price (common stock) $ 5.95 Discount rate applied to preferred shares 15% Exercise price (per share) $ 7.82 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Schedule of net property and equipment at cost | December 31, December 31, ($ in thousands) 2022 2021 Leasehold improvements $ 107 $ 107 Equipment and other 712 712 Total property and equipment, at cost $ 819 $ 819 Less: Accumulated depreciation and amortization 812 797 Property and equipment, net $ 7 $ 22 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses | |
Schedule of accrued expenses | December 31, December 31, ($ in thousands) 2022 2021 Payroll and related costs $ 1,886 $ 477 Clinical and nonclinical trial expenses 2,106 2,909 Professional and consulting fees 1,637 591 Restructuring and other costs (Note 13) 2,327 — Acquisition-related costs 1,666 — Other 289 111 Total accrued expenses $ 9,911 $ 4,088 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity (Deficit) | |
Schedule of warrants outstanding and exercisable for purchase of common stock | Number of Warrants December 31, December 31, Weighted-Average Description 2022 2021 Exercise Price Expiration Date Equity-classified warrants: May 2013 warrants 908 908 $ 1.36 None September 2013 warrants 241 241 $ 1.36 None February 2014 warrants 128 128 $ 1.36 None April 2020 Private Placement first closing warrants 178,794 178,794 $ 38.76 Apr 2023 April 2020 Private Placement second closing warrants 80,801 80,801 $ 46.07 Dec 2023 April 2020 Private Placement second closing warrants — 67,260 $ 0.17 None July 2020 Private Placement first closing warrants — 22,925 $ 0.17 None July 2020 Private Placement first closing warrants 162,601 162,601 $ 43.86 Jul 2023 Assumed Legacy Aceragen common stock warrants 79,596 — $ 7.82 Mar 2031 503,069 513,658 Liability-classified warrants: Assumed Legacy Aceragen Series Z Warrants (1) 14,215 — $ 460.00 Mar 2031 14,215 — Total outstanding 517,284 513,658 |
Summary of warrant activity | Number of Warrants Common Series Z Weighted-Average Warrants Warrants Total Exercise Price (1) Outstanding at December 31, 2021 513,658 — 513,658 $ 21.76 Issued (2) 79,596 14,215 93,811 7.82 Exercised (90,185) — (90,185) 0.17 Expired — — — — Outstanding at December 31, 2022 503,069 14,215 517,284 $ 17.58 (1) Weighted-average exercise price for Series Z Warrants is calculated based on the common stock equivalent shares and exercise price as all Series Z Warrants were automatically converted into warrants to purchase common stock on January 12, 2023. See Note 19. (2) Represents warrants issued in connection with the Aceragen Acquisition. See Note 3. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stock-Based Compensation | |
Schedule of stock-based compensation expense attributable to share-based payments made to employees and directors and included in operating expenses | Year Ended December 31, (in thousands) 2022 2021 Stock-based compensation: Research and development Employee Stock Purchase Plan $ 24 $ 28 Equity Incentive Plans 258 546 $ 282 $ 574 General and administrative Employee Stock Purchase Plan $ 5 $ 3 Equity Incentive Plans 1,901 1,960 $ 1,906 $ 1,963 Total stock-based compensation expense $ 2,188 $ 2,537 |
Schedule of weighted average assumptions applied to options | 2022 2021 Average risk-free interest rate 2.6% 0.4% Expected dividend yield — — Expected lives (years) 3.8 3.6 Expected volatility 104% 94% Weighted average exercise price (per share) $ 8.34 $ 45.56 |
Schedule of information related to outstanding and exercisable options | Common Stock Options ($ in thousands, except per share data) Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at December 31, 2021 305,838 $ 137.08 5.9 $ — Granted 68,796 8.34 Assumed in connection with Aceragen Acquisition 111,038 6.22 Exercised — — Forfeited (15,963) 3.27 Expired (63,535) 148.30 Outstanding at December 31, 2022 (1) 406,174 $ 83.00 6.1 $ 102 Exercisable at December 31, 2022 239,866 $ 132.26 4.1 $ 54 Preferred Stock Options ($ in thousands, except per share data) Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at December 31, 2021 — $ — — — Assumed in connection with Aceragen Acquisition 19,826 365.96 Forfeited (2,304) 130.00 Outstanding at December 31, 2022 (1) 17,522 $ 397.02 9.1 $ 1,073 Exercisable at December 31, 2022 5,229 $ 317.43 8.9 $ 568 (1) Includes both vested stock options as well as unvested stock options for which the requisite service period has not been rendered but that are expected to vest based on achievement of a service condition. |
Schedule of information related to restricted stock activity | Time-based Awards Market/Performance-based Awards Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Nonvested shares at December 31, 2021 4,039 $ 39.10 29,814 $ 26.14 Granted 16,657 6.79 — — Cancelled — — — — Vested (1,600) 41.36 — — Nonvested shares at December 31, 2022 19,096 $ 10.73 29,814 $ 26.14 |
Schedule of summary of restricted stock activity | Number of Shares Common Stock Series Z Nonvested shares at December 31, 2021 — — Issued in connection with Aceragen Acquisition (1) 16,763 2,993 Cancelled — — Vested (1,331) (237) Nonvested shares at December 31, 2022 15,432 2,756 (1) Issued in connection with Aceragen Acquisition to Legacy Aceragen shareholders as part of the merger consideration which include time-based vesting restrictions. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | December 31, Operating Leases (in thousands) 2023 $ 285 2024 240 2025 101 Total lease payments $ 626 Less: imputed interest (66) Total present value of lease liabilities $ 560 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of components of deferred tax assets | (in thousands) 2022 2021 Deferred tax assets: Operating loss carryforwards $ 94,356 $ 90,550 Tax credit carryforwards 29,988 28,226 Stock-based compensation 4,959 6,902 Capitalized research and development 11,287 7,818 Lease liabilities 141 220 Other 459 70 Total deferred tax assets $ 141,190 $ 133,786 Deferred tax liabilities: Right-of-use asset $ (134) $ (213) In-process research and development intangible assets (15,312) — Total deferred tax liabilities $ (15,446) $ (213) Valuation allowance $ (129,027) $ (133,573) Net deferred tax assets (liabilities) $ (3,283) $ — |
Schedule of difference between U.S. federal corporate tax rate and Company effective tax rate | 2022 2021 Expected federal income tax rate (21.0) % (21.0) % State income taxes, net of federal benefit 1.7 2.1 Federal and state credits (4.2) 1.7 Reduction of state income tax rate 14.9 — Warrant and future tranche right revaluation gain (0.3) 26.9 Series X revaluation loss 1.7 — Stock-based compensation 4.6 — Other 1.7 (0.4) Change in valuation allowance (20.4) (9.3) Effective tax rate (21.3) % 0.0 % |
Schedule of components of income tax benefit | (in thousands) 2022 2021 Current: Federal $ — $ — State — — $ — $ — Deferred: Federal $ (6,318) $ — State — — $ (6,318) $ — Total Income Tax Benefit $ (6,318) $ — |
Net Income (Loss) per Common _2
Net Income (Loss) per Common Share Applicable to Common Stockholders (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Net Income (Loss) per Common Share Applicable to Common Stockholders | |
Computation of basic and diluted net income (loss) per share | Year Ended December 31, ($ in thousands except share and per share data) 2022 2021 Net (loss) income per share — Basic: Net (loss) income $ (23,360) $ 98,091 Less: Undistributed earnings to preferred stockholders — (1,150) Net (loss) income applicable to common stockholders - basic $ (23,360) $ 96,941 Numerator for basic net (loss) income applicable to common stockholders $ (23,360) $ 96,941 Denominator for basic net (loss) income applicable to common stockholders 3,255,648 2,894,287 Net (loss) income applicable to common stockholders - basic $ (7.18) $ 33.49 Net (loss) income per share — Diluted: Net (loss) income applicable to common holders - basic $ (23,360) $ 96,941 Less: Warrant revaluation gain applicable to dilutive liability-classified warrants — (6,983) Less: Future tranche right revaluation gain applicable to dilutive liability-classified future tranche rights — (118,803) Numerator for diluted net (loss) income applicable to common stockholders $ (23,360) $ (28,845) Denominator for basic net (loss) income applicable to common stockholders 3,255,648 2,894,287 Plus: Incremental shares underlying “in the money” liability-classified warrants outstanding — 5,492 Plus: Incremental shares underlying “in the money” liability-classified future tranche rights outstanding — 48,880 Denominator for diluted net income (loss) applicable to common stockholders 3,255,648 2,948,659 Net (loss) income applicable to common stockholders - diluted $ (7.18) $ (9.78) |
Schedule of potentially dilutive securities excluded from diluted net income (loss) per common share | Year Ended December 31, 2022 2021 Common stock options 406,174 306,000 Preferred stock options 1,030,693 — Restricted stock units and restricted stock awards 226,460 33,865 Common stock warrants 503,069 513,661 Preferred stock warrants 836,176 — Convertible preferred stock 4,582,364 14 Total 7,584,936 853,540 |
Business and Organization (Deta
Business and Organization (Details) $ in Thousands | Jan. 17, 2023 | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Accumulated deficit | $ 758,821 | $ 735,461 | |
Cash, cash equivalents and investments | $ 12,000 | ||
Subsequent Events | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Reverse stock split conversion ratio | 0.059 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment Institution | Dec. 31, 2021 USD ($) | Mar. 10, 2023 | |
Summary of Significant Accounting Policies | |||
Number of operating segments | segment | 1 | ||
Number of financial institutions | Institution | 6 | ||
Unbilled accounts receivable | $ 400 | ||
Impairment of goodwill | 0 | ||
Prepaid expenses research and development | 600 | $ 900 | |
Unrecognized Tax Benefits, Income Tax Penalties Expense | 0 | 0 | |
Uncertain tax positions | $ 0 | $ 0 | |
Subsequent Events | |||
Summary of Significant Accounting Policies | |||
Percentage of cash and cash equivalent balance in segregated custodial accounts held by third party custodian | 56% | ||
Minimum | |||
Summary of Significant Accounting Policies | |||
Equipment depreciation period | 3 years | ||
Maximum | |||
Summary of Significant Accounting Policies | |||
Equipment depreciation period | 5 years | ||
Directors | |||
Summary of Significant Accounting Policies | |||
Stock options, vesting period | 1 year | ||
Employees | |||
Summary of Significant Accounting Policies | |||
Stock options, vesting period | 4 years | ||
IPR&D | |||
Summary of Significant Accounting Policies | |||
Impairment of intangible assets | $ 0 |
Business Acquisition - Addition
Business Acquisition - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Sep. 28, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | |||
Preferred stock, par value | $ 0.01 | $ 0.01 | |
Acquisition-related costs | $ 4,566,000 | ||
Nonrecurring pro forma transaction costs | 11,200,000 | $ 0 | |
Payment of success fee | 4,000,000 | ||
Severance costs | 800,000 | ||
Restructuring costs | 3,713,000 | 1,322,000 | |
Tax expense (benefit) | (6,318,000) | $ 6,300,000 | |
Series X preferred stock | |||
Business Acquisition [Line Items] | |||
Preferred stock, par value | $ 0.01 | ||
Aceragen | |||
Business Acquisition [Line Items] | |||
Acquisition-related costs | $ 4,600,000 | ||
Fair value of total consideration | $ 65,616,000 | ||
Aceragen | Merger Agreement | |||
Business Acquisition [Line Items] | |||
Outstanding security interests percentage | 100% | ||
Number of share acquisitions | 451,608 | ||
Aceragen | Series Z convertible preferred stock | Merger Agreement | |||
Business Acquisition [Line Items] | |||
Shares issued during the acquisitions | 80,656 | ||
Aceragen | Series X preferred stock | Merger Agreement | |||
Business Acquisition [Line Items] | |||
Number of share acquisitions | 5 |
Business Acquisition - Purchase
Business Acquisition - Purchase price consideration (Details) - Aceragen $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Business Acquisition | |
Total Consideration paid | $ 65,616 |
Stock options, restricted stock and warrants | |
Business Acquisition | |
Stock issued | 5,822 |
Series Z convertible preferred stock | Stock options, restricted stock and warrants | |
Business Acquisition | |
Stock issued | 25,085 |
Series X preferred stock | Stock options, restricted stock and warrants | |
Business Acquisition | |
Stock issued | 31,900 |
Common Stock | Stock options, restricted stock and warrants | |
Business Acquisition | |
Stock issued | $ 2,809 |
Business Acquisition - Allocati
Business Acquisition - Allocation of the purchase price to the assets acquired and liabilities assumed (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Assets acquired: | |
Goodwill | $ 11,100 |
Aceragen | |
Assets acquired: | |
Cash, cash equivalents and restricted cash | 5,482 |
Receivables | 1,914 |
Prepaid expenses and other assets | 575 |
In-process research and development assets | 71,600 |
Goodwill | 11,100 |
Total assets acquired | 90,671 |
Liabilities assumed: | |
Accounts Payable and accrued expenses | 7,886 |
Acquisition Obligation (Note 7) | 7,546 |
Operating lease liabilities | 22 |
Deferred tax liabilities | 9,601 |
Total liabilities assumed | 25,055 |
Net assets acquired | $ 65,616 |
Business Acquisition - Summary
Business Acquisition - Summary of intangible assets acquired (Details) - Aceragen $ in Thousands | Dec. 31, 2022 USD ($) |
Business Acquisition | |
Acquisition Date Fair Value | $ 71,600 |
In-process research and development costs (IPR&D) | |
Business Acquisition | |
Acquisition Date Fair Value | 71,600 |
Carrying Value | 71,600 |
ACG-701 for Cysatic Fibrosis | |
Business Acquisition | |
Acquisition Date Fair Value | 50,700 |
Carrying Value | 50,700 |
ACG-701 for Melioidosis | |
Business Acquisition | |
Acquisition Date Fair Value | 14,900 |
Carrying Value | 14,900 |
ACG-801 for Farber Disease | |
Business Acquisition | |
Acquisition Date Fair Value | 6,000 |
Carrying Value | $ 6,000 |
Business Acquisition - Pro Form
Business Acquisition - Pro Forma Financial Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Business Acquisition | ||
Net revenues | $ 18,196 | $ 1,005 |
Net (loss) income | $ (35,379) | $ 80,502 |
Fair Value Measurements - Trans
Fair Value Measurements - Transfers Between Levels (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Fair Value Measurements | |
Fair value of assets transfers from level 1 to level 2 | $ 0 |
Fair value of assets transfers from level 2 to level 1 | 0 |
Fair value of liabilities transfers from level 1 to level 2 | 0 |
Fair value of liabilities transfers from level 2 to level 1 | 0 |
Fair value of assets transfers into level 3 | 0 |
Fair value of assets transfers out of level 3 | 0 |
Fair value of liabilities transfers into level 3 | 0 |
Fair value of liabilities transfers out of level 3 | $ 0 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Total Assets | $ 12,044 | $ 32,545 |
Total Liabilities | 37,119 | |
Warrant liability | ||
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Total Liabilities | 2,819 | |
Series X preferred stock liability | ||
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Total Liabilities | 34,300 | |
Cash | ||
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Cash equivalents - money market funds | 3,342 | 250 |
Money market funds | ||
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Cash equivalents - money market funds | 8,702 | 32,295 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | ||
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Total Assets | 12,044 | 32,545 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Cash | ||
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Cash equivalents - money market funds | 3,342 | 250 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Money market funds | ||
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Cash equivalents - money market funds | 8,702 | $ 32,295 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Total Liabilities | 37,119 | |
Significant Unobservable Inputs (Level 3) | Warrant liability | ||
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Total Liabilities | 2,819 | |
Significant Unobservable Inputs (Level 3) | Series X preferred stock liability | ||
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||
Total Liabilities | $ 34,300 |
Fair Value Measurements - Ass_2
Fair Value Measurements - Assets and Liabilities at Fair Value Changes in Level 3 Liabilities (Details) - Fair Value, Measurements, Recurring | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Warrant liability | |
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | |
Issuance in connection with Acquisition of Aceragen | $ 3,180,000 |
Change in fair value | (361,000) |
Ending balance | 2,819,000 |
Series X Preferred Stock liability | |
Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | |
Issuance in connection with Acquisition of Aceragen | 31,900 |
Change in fair value | 2,400 |
Ending balance | $ 34,300 |
Fair Value Measurements - Weigh
Fair Value Measurements - Weighted-average assumptions (Details) | Dec. 31, 2022 $ / shares |
Risk-free interest rate | |
Fair Value Measurement Inputs and Valuation Techniques | |
Debt instrument measurement input | 0.0409 |
Expected term | |
Fair Value Measurement Inputs and Valuation Techniques | |
Debt instrument measurement input | 0.041 |
Expected volatility | |
Fair Value Measurement Inputs and Valuation Techniques | |
Debt instrument measurement input | 1.04 |
Stock price (common stock) | |
Fair Value Measurement Inputs and Valuation Techniques | |
Debt instrument measurement input | 0.0595 |
Discount rate applied to preferred shares | |
Fair Value Measurement Inputs and Valuation Techniques | |
Debt instrument measurement input | 0.15 |
Exercise price | |
Fair Value Measurement Inputs and Valuation Techniques | |
Debt instrument measurement input | 7.82 |
Property and Equipment - Net Pr
Property and Equipment - Net Property and Equipment at Cost (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment | ||
Total property and equipment, at cost | $ 819 | $ 819 |
Less: Accumulated depreciation and amortization | 812 | 797 |
Property and equipment, net | 7 | 22 |
Leasehold improvements | ||
Property, Plant and Equipment | ||
Total property and equipment, at cost | 107 | 107 |
Laboratory equipment and other | ||
Property, Plant and Equipment | ||
Total property and equipment, at cost | $ 712 | $ 712 |
Property and Equipment - Deprec
Property and Equipment - Depreciation and Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property and Equipment | ||
Depreciation and amortization expense on property and equipment | $ 0.1 | $ 0.1 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Expenses | ||
Payroll and related costs | $ 1,886 | $ 477 |
Clinical and nonclinical trial expenses | 2,106 | 2,909 |
Professional and consulting fees | 1,637 | 591 |
Restructuring and other costs (Note 13) | 2,327 | |
Acquisition-related costs | 1,666 | |
Other | 289 | 111 |
Total accrued expenses | $ 9,911 | $ 4,088 |
Acquisition Obligation (Details
Acquisition Obligation (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2023 USD ($) D | Dec. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Business Acquisition | |||
Acquisition obligation, net | $ 6,078 | $ 6,078 | |
Payment on debts | 1,534 | ||
Convertible Notes | Subsequent Events | |||
Business Acquisition | |||
Annual interest rate | 12% | ||
Aggregate amount | $ 5,900 | ||
Consecutive trading days | D | 15 | ||
Aceragen | |||
Business Acquisition | |||
Aggregate future payment | 7,500 | 7,500 | |
Acquisition obligation, net | 6,000 | 6,000 | |
Acquisition obligation, net | 1,500 | 1,500 | |
Fair value of acquisition obligation | 7,500 | 7,500 | |
Payment on debts | 1,500 | ||
Deferred acquisition obligation | $ 6,000 | $ 6,000 | |
Annual interest rate | 12% | 12% |
Series X Preferred Stock Liab_2
Series X Preferred Stock Liability (Details) | 12 Months Ended |
Dec. 31, 2022 shares | |
Series X preferred stock | Aceragen | |
Stock issued (in shares) | 5 |
Redeemable Convertible Prefer_2
Redeemable Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||
Dec. 23, 2019 | Dec. 31, 2019 | Dec. 31, 2022 | Dec. 31, 2021 | |
Redeemable Convertible Preferred Stock | ||||
Warrant exercised price (per share) | $ 17.58 | $ 21.76 | ||
Aggregate gross proceeds | $ 3.9 | |||
Shares authorized (in shares) | 140,000,000 | 140,000,000 | ||
Gross proceeds | $ 6.2 | |||
Series B1 convertible preferred stock | ||||
Redeemable Convertible Preferred Stock | ||||
Sale of redeemable convertible preferred stock | 23,684 | 23,684 | ||
Series B1 convertible preferred stock | Common stock warrants | ||||
Redeemable Convertible Preferred Stock | ||||
Warrant to purchase stock | 139,318 | |||
Warrant exercised price (per share) | $ 25.84 | |||
Series B1 convertible preferred stock | Preferred Stock Warrant | ||||
Redeemable Convertible Preferred Stock | ||||
Warrant to purchase stock | 23,684 | |||
Warrant exercised price (per share) | $ 2,584 | |||
Series B2 convertible preferred stock | ||||
Redeemable Convertible Preferred Stock | ||||
Aggregate gross proceeds | $ 15 | |||
Preferred shares | 98,685 | |||
Series B2 convertible preferred stock | Common stock warrants | ||||
Redeemable Convertible Preferred Stock | ||||
Warrant to purchase stock | 580,500 | |||
Warrant exercised price (per share) | $ 25.84 | |||
Series B2 convertible preferred stock | Preferred Stock Warrant | ||||
Redeemable Convertible Preferred Stock | ||||
Warrant to purchase stock | 98,685 | |||
Warrant exercised price (per share) | $ 2,584 | |||
Series B3 convertible preferred stock | ||||
Redeemable Convertible Preferred Stock | ||||
Aggregate gross proceeds | $ 15 | |||
Preferred shares | 82,418 | |||
Series B3 convertible preferred stock | Common stock warrants | ||||
Redeemable Convertible Preferred Stock | ||||
Warrant to purchase stock | 387,849 | |||
Warrant exercised price (per share) | $ 30.94 | |||
Series B3 convertible preferred stock | Preferred Stock Warrant | ||||
Redeemable Convertible Preferred Stock | ||||
Warrant to purchase stock | 65,934 | |||
Warrant exercised price (per share) | $ 3,094 | |||
Series B4 convertible preferred stock | ||||
Redeemable Convertible Preferred Stock | ||||
Aggregate gross proceeds | $ 15 | |||
Preferred shares | 82,418 | |||
Expiration period | 21 months | |||
Series B4 convertible preferred stock | Common stock warrants | ||||
Redeemable Convertible Preferred Stock | ||||
Warrant to purchase stock | 387,849 | |||
Warrant exercised price (per share) | $ 30.94 | |||
Series B4 convertible preferred stock | Preferred Stock Warrant | ||||
Redeemable Convertible Preferred Stock | ||||
Warrant to purchase stock | 65,934 | |||
Warrant exercised price (per share) | $ 3,094 | |||
Series Z Redeemable Convertible Preferred Stock | ||||
Redeemable Convertible Preferred Stock | ||||
Conversion of common stock | 58.82 | |||
Series Z Redeemable Convertible Preferred Stock | Aceragen | ||||
Redeemable Convertible Preferred Stock | ||||
Shares issued during the acquisitions | 80,656 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) - Preferred Stock (Details) | 12 Months Ended | |||
Nov. 17, 2022 Vote $ / shares shares | Dec. 31, 2022 $ / shares shares | Sep. 28, 2022 $ / shares | Dec. 31, 2021 $ / shares shares | |
Class of Stock | ||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||
Preferred stock, par value | $ / shares | $ 0.01 | $ 0.01 | ||
Series A convertible preferred stock | ||||
Class of Stock | ||||
Preferred stock, shares designated | 1,500,000 | 1,500,000 | ||
Annual percentage of dividend of preferred stock | 1% | |||
Series A preferred stock liquidation preference per share | $ / shares | $ 1 | |||
Series A Preferred stock conversion price per share | $ / shares | $ 4,624 | |||
Preferred stock, shares outstanding | 655 | 655 | ||
Series B Preferred Stock | ||||
Class of Stock | ||||
Preferred stock, par value | $ / shares | $ 0.01 | |||
Preferred stock, shares designated | 200,000 | 200,000 | ||
Preferred stock, shares outstanding | 62,355 | 62,355 | ||
Number of shares of preferred stock issued as dividends for each outstanding share | 0.001 | |||
Number of votes per share | Vote | 1,000,000 | |||
Series B1 convertible preferred stock | ||||
Class of Stock | ||||
Preferred stock, shares designated | 277,921 | |||
Preferred stock, shares outstanding | 0 | 0 | ||
Series B2 convertible preferred stock | ||||
Class of Stock | ||||
Preferred stock, shares designated | 98,685 | |||
Preferred stock, shares outstanding | 0 | 0 | ||
Series B3 convertible preferred stock | ||||
Class of Stock | ||||
Preferred stock, shares designated | 82,814 | |||
Preferred stock, shares outstanding | 0 | 0 | ||
Series B4 convertible preferred stock | ||||
Class of Stock | ||||
Preferred stock, shares designated | 82,814 | |||
Preferred stock, shares outstanding | 0 | 0 | ||
Series Z Redeemable Convertible Preferred Stock | ||||
Class of Stock | ||||
Preferred stock, shares designated | 80,656 | |||
Series X preferred stock | ||||
Class of Stock | ||||
Preferred stock, par value | $ / shares | $ 0.01 | |||
Preferred stock, shares designated | 5 | |||
Series X preferred stock | Aceragen | ||||
Class of Stock | ||||
Stock issued (in shares) | 5 |
Stockholders' Equity (Deficit_3
Stockholders' Equity (Deficit) - Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | |||
Mar. 04, 2019 | May 05, 1998 | Nov. 30, 2018 | Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Stock | |||||
Shares authorized (in shares) | 140,000,000 | 140,000,000 | |||
Shares available for future issuance | 7,861,082 | ||||
Common Stock | |||||
Class of Stock | |||||
Stock issued (in shares) | 8,821 | 348,079 | |||
Sale price of common shares subject to the liquidation put | $ 2,176 | ||||
Minimum closing sales price of common stock to issue termination notice to put holders | $ 4,352 | ||||
Price exceeds on number of days | 20 days | ||||
Put Rights outstanding | 0 | ||||
Liquidation put shares no longer held by original holders | 2,941 | ||||
Shares held by put holders | 263 | ||||
Remaining shares of common stock subject to the liquidation put | 5,617 | ||||
"At-The-Market" Equity Program | |||||
Class of Stock | |||||
Stock issued (in shares) | 0 | 301,021 | |||
Percentage of fixed commission expense of gross proceeds of shares sold in ATM agreement | 3% | ||||
Maximum value of shares that are permitted to be sold, subject to certain limitations | $ 19.5 | ||||
Net proceeds from offering of common stock | $ 15.3 | ||||
"At-The-Market" Equity Program | Common Stock | |||||
Class of Stock | |||||
Net proceeds from offering of common stock | $ 50 | ||||
Lincoln Park Capital Fund, LLC ("Investor") | |||||
Class of Stock | |||||
Stock issued (in shares) | 15,867 | 0 | 47,059 | ||
Value of shares which may be sold | $ 35 | ||||
Duration over which common stock purchase agreement may be sold | 36 months | ||||
Stock issued (per share) | $ 48.28 | ||||
Net proceeds from offering of common stock | $ 4.2 |
Stockholders' Equity (Deficit_4
Stockholders' Equity (Deficit) - Common Stock Warrants (Details) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Class of Warrant or Right | ||
Number of Shares | 517,284 | 513,658 |
Weighted-Average Exercise Price | $ 17.58 | $ 21.76 |
Equity Classified Warrants | ||
Class of Warrant or Right | ||
Number of Shares | 503,069 | 513,658 |
May 2013 Warrants | ||
Class of Warrant or Right | ||
Number of Shares | 908 | 908 |
Weighted-Average Exercise Price | $ 1.36 | $ 1.36 |
September 2013 Warrants | ||
Class of Warrant or Right | ||
Number of Shares | 241 | 241 |
Weighted-Average Exercise Price | $ 1.36 | $ 1.36 |
February 2014 Warrants | ||
Class of Warrant or Right | ||
Number of Shares | 128 | 128 |
Weighted-Average Exercise Price | $ 1.36 | $ 1.36 |
April 2020 Private Placement first closing warrants | ||
Class of Warrant or Right | ||
Number of Shares | 178,794 | 178,794 |
Weighted-Average Exercise Price | $ 38.76 | $ 38.76 |
April 2020 Private Placement second closing warrants | ||
Class of Warrant or Right | ||
Number of Shares | 80,801 | 80,801 |
Weighted-Average Exercise Price | $ 46.07 | $ 46.07 |
April 2020 Private Placement second closing warrants | ||
Class of Warrant or Right | ||
Number of Shares | 67,260 | |
Weighted-Average Exercise Price | 0.17 | |
July 2020 Private Placement first closing warrants | ||
Class of Warrant or Right | ||
Number of Shares | 22,925 | |
Weighted-Average Exercise Price | $ 0.17 | |
July 2020 Private Placement first closing warrants | ||
Class of Warrant or Right | ||
Number of Shares | 162,601 | 162,601 |
Weighted-Average Exercise Price | $ 43.86 | $ 43.86 |
Assumed Legacy Aceragen common stock warrants | ||
Class of Warrant or Right | ||
Number of Shares | 79,596 | |
Weighted-Average Exercise Price | $ 7.82 | |
Liability Classified Warrants | ||
Class of Warrant or Right | ||
Number of Shares | 14,215 | |
Assumed Legacy Aceragen Series Z Warrants | ||
Class of Warrant or Right | ||
Number of Shares | 14,215 | |
Weighted-Average Exercise Price | $ 460 |
Stockholders' Equity (Deficit_5
Stockholders' Equity (Deficit) - Warrant Activity (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Class of Warrant or Right | |
Outstanding at December 31, 2021 | 513,658 |
Issued | 93,811 |
Exercised | (90,185) |
Outstanding at December 31, 2022 | 517,284 |
Warrant exercise price at December 31, 2021 | $ / shares | $ 21.76 |
Warrant exercise price per share, issued | $ / shares | 7.82 |
Exercised | $ / shares | 0.17 |
Warrant exercise price at December 31, 2022 | $ / shares | $ 17.58 |
Series Z Warrants | |
Class of Warrant or Right | |
Issued | 14,215 |
Outstanding at December 31, 2022 | 14,215 |
Common stock warrants | |
Class of Warrant or Right | |
Outstanding at December 31, 2021 | 513,658 |
Issued | 79,596 |
Exercised | (90,185) |
Outstanding at December 31, 2022 | 503,069 |
Government Contracts Revenue (D
Government Contracts Revenue (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) contract | Dec. 31, 2021 USD ($) | |
Government Contracts Revenue | ||
Number of in process contracts | contract | 3 | |
Aggregate contract value | $ 46,300 | |
Contract value | 16,000 | |
Remaining contractual value | 30,300 | |
Government contracts revenue | 4,862 | $ 0 |
Performance obligation | 0 | |
Defense Threat Reduction Agency | ||
Government Contracts Revenue | ||
Remaining contractual value | 30,000 | |
Government contracts revenue | $ 4,600 |
Clinical Funding, Collaborati_2
Clinical Funding, Collaboration and License Agreements (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Feb. 28, 2021 | Apr. 30, 2019 | Dec. 31, 2022 | Dec. 31, 2021 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions | ||||
Research and development | $ 12,188 | $ 16,375 | ||
Option and License Agreement with Licensee | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions | ||||
Percentage of shares acquired | 10% | |||
Maximum | Option and License Agreement with Licensee | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions | ||||
Amount of investment in equity security without readily determinable fair value, written off | $ 100 | |||
Cystic Fibrosis Foundation | Cystic Fibrosis Foundation Therapeutic Development Award | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions | ||||
Clinical funding amount | 3,500 | |||
Proceeds from clinical funding | 1,000 | |||
Additional clinical funding amount | 2,500 | |||
Scriptr Global, Inc. | Research and Development Plans and Designation of Development Candidates | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions | ||||
Research and development | $ 500 | $ 2,100 | ||
Scriptr Global, Inc. | Maximum | Research and Development Plans and Designation of Development Candidates | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions | ||||
Research period | 270 days | |||
Deferred revenue recognition period | 270 days | |||
IMO-9200 License | Option and License Agreement with Licensee | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions | ||||
Upfront payment received under collaboration agreement | $ 1,400 |
Restructuring and Other Costs (
Restructuring and Other Costs (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Sep. 28, 2022 position | Sep. 27, 2022 position | Apr. 30, 2021 position | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Restructuring costs | |||||
Restructuring and other costs | $ 3,713 | $ 1,322 | |||
Accrued restructuring | 2,327 | ||||
Employee Severance and Benefits | |||||
Restructuring costs | |||||
Number of positions eliminated | position | 7 | 5 | 16 | ||
Percentage of positions eliminated | 54% | 50% | |||
Restructuring and other costs | 3,700 | $ 1,300 | |||
Accrued Liabilities | Employee Severance and Benefits | |||||
Restructuring costs | |||||
Accrued restructuring | 2,300 | ||||
Other liabilities | Employee Severance and Benefits | |||||
Restructuring costs | |||||
Long-term portion of the accrued restructuring balance | $ 100 |
Stock-Based Compensation - Equi
Stock-Based Compensation - Equity Incentive Plans (Details) - shares | 12 Months Ended | ||
Jul. 26, 2013 | Dec. 31, 2022 | Sep. 28, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options outstanding under earlier plans | 4,908 | ||
Grant of inducement stock option | 19,116 | ||
2013 Stock Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common shares available for grant | 603,121 | 252,527 | |
Maximum number of additional common shares | 9,174 | ||
Common stock options outstanding | 284,017 | ||
Restricted stock units outstanding | 48,910 | ||
Legacy Aceragen 2021 Stock Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock shares authorized for issuance under stock purchase plan | 0 |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee Stock Purchase Plans (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Defined Contribution Plan, Cost | $ 200,000 | $ 300,000 |
Percentage of share-based compensation expense | 15% | |
Weighted average grant date fair value of options granted during the period (per share) | $ 5.88 | $ 26.18 |
2017 Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum percentage of total combined voting power or value of the stock of the Company after the grant | 5% | |
Common shares available for grant | 39,048 | |
Common stock share issued | 7,788 | 2,889 |
Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Minimum percentage in payroll of deduction base salary to acquire shares of common stock | 1% | |
Maximum percentage in payroll of deduction base salary to acquire shares of common stock | 10% | |
Percentage of fair market value of common stock for the ESPP option price | 85% | |
Annual maximum a participant may purchase under the employee stock purchase plan | $ 25,000 | |
Maximum | 2017 Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock shares authorized for issuance under stock purchase plan | 59,558 | |
Maximum | Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Subsequent offering period as established by the compensation committee | 12 months | |
Defined Contribution Plan, Cost | $ 100,000 | $ 100,000 |
Stock-Based Compensation - Acco
Stock-Based Compensation - Accounting for Stock-based Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock-based compensation | $ 2,188 | $ 2,537 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock-based compensation | 282 | 574 |
Research and development | Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock-based compensation | 24 | 28 |
Research and development | Equity Incentive Plans | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock-based compensation | 258 | 546 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock-based compensation | 1,906 | 1,963 |
General and administrative | Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock-based compensation | 5 | 3 |
General and administrative | Equity Incentive Plans | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock-based compensation | $ 1,901 | $ 1,960 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions Used in Determining Fair Value of Stock Options (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-Based Compensation | ||
Options to purchase common stock granted to employees and directors | 68,796 | 79,784 |
Average risk free interest rate | 2.60% | 0.40% |
Dividend rate | 0% | |
Expected lives (years) | 3 years 9 months 18 days | 3 years 7 months 6 days |
Expected volatility | 104% | 94% |
Weighted average exercise price (per share) | $ 8.34 | $ 45.56 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||
Granted, Weighted Average Exercise Price | $ 8.34 | $ 45.56 | |
Outstanding, Intrinsic Value | $ 102 | ||
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Accelerated vesting, number of shares | 90,328 | ||
Unrecognized compensation cost related to nonvested stock-based compensation | $ 3,900 | ||
Weighted average remaining period over which unrecognized compensation expense will be recognized | 2 years 8 months 12 days | ||
Common Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Options, Outstanding, Beginning Balance | 305,838 | ||
Granted | 68,796 | ||
Assumed in connection with Aceragen Acquisition | 111,038 | ||
Forfeited | (15,963) | ||
Expired | (63,535) | ||
Options, Outstanding, Ending Balance | 406,174 | 305,838 | |
Exercisable, Ending Balance | 239,866 | ||
Weighted Average Exercise Price, Beginning Balance | $ 137.08 | ||
Granted, Weighted Average Exercise Price | 8.34 | ||
Assumed in connection with Aceragen Acquisition, Weighted Average Exercise Price | 6.22 | ||
Forfeited, Weighted Average Exercise Price | 3.27 | ||
Expired, Weighted Average Exercise Price | 148.30 | ||
Weighted Average Exercise Price, Ending Balance | 83 | $ 137.08 | |
Exercisable, Weighted Average Exercise Price | $ 132.26 | ||
Outstanding, Weighted Average Remaining Contractual Term | 6 years 1 month 6 days | 5 years 10 months 24 days | |
Exercisable, Weighted Average Remaining Contractual Term | 4 years 1 month 6 days | ||
Exercisable, Intrinsic Value | $ 54 | ||
Preferred Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Assumed in connection with Aceragen Acquisition | 19,826 | ||
Forfeited | (2,304) | ||
Options, Outstanding, Ending Balance | 17,522 | ||
Exercisable, Ending Balance | 5,229 | ||
Assumed in connection with Aceragen Acquisition, Weighted Average Exercise Price | $ 365.96 | ||
Forfeited, Weighted Average Exercise Price | 130 | ||
Weighted Average Exercise Price, Ending Balance | 397.02 | ||
Exercisable, Weighted Average Exercise Price | $ 317.43 | ||
Outstanding, Weighted Average Remaining Contractual Term | 9 years 1 month 6 days | ||
Exercisable, Weighted Average Remaining Contractual Term | 8 years 10 months 24 days | ||
Outstanding, Intrinsic Value | $ 1,073 | ||
Exercisable, Intrinsic Value | $ 568 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Unit Activity (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Jul. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restricted Stock Unit Activity, Weighted-Average Grant Date Fair Value | ||||
Share-based Compensation | $ 2,188,000 | $ 2,537,000 | ||
Restricted stock units | ||||
Restricted Stock Unit Activity, Number of Shares | ||||
Nonvested shares, Beginning Balance | 4,039 | |||
Granted | 16,657 | |||
Vested | (1,600) | |||
Nonvested shares, Ending Balance | 19,096 | 4,039 | ||
Restricted Stock Unit Activity, Weighted-Average Grant Date Fair Value | ||||
Nonvested shares, Weighted Average Grant Date Fair Value, Beginning Balance | $ 39.10 | |||
Granted, Weighted-Average Grant Date Fair Value | 6.79 | |||
Vested, Weighted-Average Grant Date Fair Value | 41.36 | |||
Nonvested shares, Weighted Average Grant Date Fair Value, Ending Balance | $ 10.73 | $ 39.10 | ||
Accelerated vesting, number of shares | 8,110 | |||
Recognized compensation expense | $ 700,000 | $ 300,000 | ||
Weighted average remaining period over which unrecognized compensation expense will be recognized | 9 months 18 days | |||
Restricted stock units | Maximum | ||||
Restricted Stock Unit Activity, Weighted-Average Grant Date Fair Value | ||||
Unrecognized compensation expense | $ 100,000 | |||
Performance Shares [Member] | ||||
Restricted Stock Unit Activity, Number of Shares | ||||
Nonvested shares, Beginning Balance | 29,814 | |||
Nonvested shares, Ending Balance | 29,814 | 29,814 | ||
Restricted Stock Unit Activity, Weighted-Average Grant Date Fair Value | ||||
Nonvested shares, Weighted Average Grant Date Fair Value, Beginning Balance | $ 26.14 | |||
Nonvested shares, Weighted Average Grant Date Fair Value, Ending Balance | $ 26.14 | $ 26.14 | ||
Unrecognized compensation expense | $ 0 | |||
Requisite service period (in years) | 2 years 4 months 9 days | |||
Share-based Compensation | 300,000 | |||
Additional compensation expense as a result of meeting certain achievements | $ 300,000 |
Stock-Based Compensation - Re_2
Stock-Based Compensation - Restricted Stock Activity (Details) | 12 Months Ended |
Dec. 31, 2022 shares | |
Restricted Common Stock | |
Restricted Stock Unit Activity, Number of Shares | |
Granted | 16,763 |
Vested | (1,331) |
Nonvested shares, Ending Balance | 15,432 |
Restricted Series Z Preferred Stock | |
Restricted Stock Unit Activity, Number of Shares | |
Granted | 2,993 |
Vested | (237) |
Nonvested shares, Ending Balance | 2,756 |
Commitments and Contingencies -
Commitments and Contingencies - Rent Expense and Lease Information (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 USD ($) ft² | Dec. 31, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | ||
Rent expense, including real estate taxes | $ | $ 0.4 | $ 0.4 |
Exton Facility | ||
Property, Plant and Equipment [Line Items] | ||
Leased office space | ft² | 11,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Commitments Under Lease Agreements (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Commitments and Contingencies | |
2023 | $ 285 |
2024 | 240 |
2025 | 101 |
Total lease payments | 626 |
Less: imputed interest | (66) |
Total present value of lease liabilities | $ 560 |
Commitments and Contingencies_3
Commitments and Contingencies - Employee Benefit Plan (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Defined Contribution Plan Disclosure [Line Items] | ||
Maximum employer match as a percentage of base pay | 5% | |
Percentage the employer matches of employee contributions | 100% | |
Portion of the employee's base salary that the Company matches | 5% | |
Total matching contributions | $ 0.2 | $ 0.3 |
Legacy Aceragen Pooled 401(K) Plan | First 3% of employee eligible compensation | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Percentage the employer matches of employee contributions | 100% | |
Portion of the employee's base salary that the Company matches | 3% | |
Legacy Aceragen Pooled 401(K) Plan | Next 2% of employee eligible compensation | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Percentage the employer matches of employee contributions | 50% | |
Portion of the employee's base salary that the Company matches | 2% |
Commitments and Contingencies_4
Commitments and Contingencies - Acquisition Obligations (Details) - Acquisition obligations - Aceragen | 12 Months Ended | |
Sep. 28, 2022 USD ($) item | Dec. 31, 2022 USD ($) | |
Loss Contingencies [Line Items] | ||
Number of former executives | item | 2 | |
Number of retained executives | item | 3 | |
Compensation cost resulting in liability | $ | $ 2,700,000 | |
Period of employment termination | 6 months | |
Compensation expense recognized | $ | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Sep. 28, 2022 | Dec. 31, 2021 | |
Income Taxes | |||
Deferred tax assets | $ 6,300 | ||
Unrecognized tax benefits from uncertain tax | 0 | $ 0 | |
Federal | |||
Income Taxes | |||
Cumulative net operating loss carryforwards | $ 355,800 | ||
Percentage of taxable income that can be used to offset future taxable periods as a result of the TCJA | 80% | ||
Unlimited carryforward | $ 158,400 | ||
Tax credit carryforwards | 28,300 | ||
State | |||
Income Taxes | |||
Cumulative net operating loss carryforwards | 362,700 | ||
Tax credit carryforwards | 1,900 | ||
Aceragen | SWITZERLAND | |||
Income Taxes | |||
Cumulative net operating loss carryforwards | $ 900 | $ 800 | |
Aceragen | Federal | |||
Income Taxes | |||
Cumulative net operating loss carryforwards | 8,100 | ||
Aceragen | State | |||
Income Taxes | |||
Cumulative net operating loss carryforwards | $ 19,100 |
Income Taxes - Components of th
Income Taxes - Components of the Deferred Tax Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Operating loss carryforwards | $ 94,356 | $ 90,550 |
Tax credit carryforwards | 29,988 | 28,226 |
Stock-based compensation | 4,959 | 6,902 |
Capitalized research and development | 11,287 | 7,818 |
Lease liabilities | 141 | 220 |
Other | 459 | 70 |
Total deferred tax assets | 141,190 | 133,786 |
Deferred tax liabilities: | ||
Right-of-use asset | (134) | (213) |
IPR&D intangible assets | (15,312) | |
Total deferred tax liabilities | (15,446) | (213) |
Valuation allowance | (129,027) | $ (133,573) |
Net deferred tax assets (liabilities) | $ (3,283) |
Income Taxes - Difference Betwe
Income Taxes - Difference Between U.S. Federal Corporate Tax Rate and Company's Effective Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Expected federal income tax rate | (21.00%) | (21.00%) |
State income taxes, net of federal benefit | 1.70% | 2.10% |
Federal and state credits | (4.20%) | 1.70% |
Reduction of state income tax rate | 14.90% | |
Warrant and future tranche right revaluation loss | (0.30%) | 26.90% |
Series X revaluation loss | 1.70% | |
Stock-based compensation | 4.60% | |
Other | 1.70% | (0.40%) |
Change in valuation allowance | (20.40%) | (9.30%) |
Effective tax rate | (21.30%) | 0% |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred: | ||
Federal | $ (6,318) | |
Deferred income tax benefit | (6,318) | |
Total Income Tax Benefit | $ (6,318) | $ 6,300 |
Related Party Transactions - Ov
Related Party Transactions - Overview of Related Parties (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | 19 Months Ended | |||
Jan. 31, 2023 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Sep. 28, 2022 | Jan. 17, 2023 | |
Related Party Transactions | ||||||
Exercise price of warrants | $ 17.58 | $ 21.76 | ||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||
Board fees paid in stock in lieu of director board and committee fees | $ 100 | |||||
Common stock issued in lieu of board fees | 10,781 | 16,221 | ||||
Series Z convertible preferred stock | Subsequent Events | ||||||
Related Party Transactions | ||||||
Convertible preferred stock | 4,744,467 | |||||
Series Z convertible preferred stock | Directors | ||||||
Related Party Transactions | ||||||
Aggregate common shares | 127,718 | |||||
Convertible preferred stock held by related party | 22,810 | |||||
Series Z convertible preferred stock | Directors | Subsequent Events | ||||||
Related Party Transactions | ||||||
Aggregate common shares | 1,469,482 | |||||
Convertible preferred stock | 1,341,764 | |||||
Pillar Investment Entities | ||||||
Related Party Transactions | ||||||
Aggregate common shares | 985,204 | |||||
Exercise price of warrants | $ 0.17 | $ 0.17 | ||||
Issuance of common stock upon exercise of warrants (in shares) | 90,186 | 185,787 | ||||
Cashless shares | 1,121 | |||||
Pillar Investment Entities | Maximum | ||||||
Related Party Transactions | ||||||
Proceeds from exercise of warrants | $ 100 | $ 100 | ||||
Pillar Investment Entities | Warrant, Tranche One | ||||||
Related Party Transactions | ||||||
Number of Shares | 178,794 | |||||
Exercise price of warrants | $ 38.76 | |||||
Pillar Investment Entities | Warrant, Tranche Two | ||||||
Related Party Transactions | ||||||
Number of Shares | 162,601 | |||||
Exercise price of warrants | $ 43.86 | |||||
Pillar Investment Entities | Warrant, Tranche Three | ||||||
Related Party Transactions | ||||||
Number of Shares | 80,801 | |||||
Exercise price of warrants | $ 46.07 | |||||
NovaQuest | ||||||
Related Party Transactions | ||||||
Percentage of proceeds from possible sale of priority review voucher | 35% | |||||
NovaQuest | Common Stock Warrants | ||||||
Related Party Transactions | ||||||
Warrants right to purchase | 79,032 | |||||
NovaQuest | Series Z Preferred Stock Warrants | ||||||
Related Party Transactions | ||||||
Warrants right to purchase | 14,115 | |||||
NovaQuest | Series X convertible preferred stock | ||||||
Related Party Transactions | ||||||
Convertible preferred stock held by related party | 5 | |||||
Dr. Atul Chopra | Consulting Agreement | ||||||
Related Party Transactions | ||||||
Warrants right to purchase | 1,000,000 | |||||
Consulting fees | $ 300 | |||||
Service fees per month | $ 16,667 | |||||
Term of agreement | 1 year | |||||
Renewal term of agreement | 1 year | |||||
Common stock, par value | $ 0.001 | |||||
Issuance of common stock for services rendered (in shares) | 1,000,000 |
Net Income (Loss) per Common _3
Net Income (Loss) per Common Share Applicable to Common Stockholders -Computation of basic and diluted net income per common share-as adjusted (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Net (loss) income per share - Basic: | ||
Net (loss) income | $ (23,360) | $ 98,091 |
Less: Undistributed earnings to preferred stockholders | (1,150) | |
Net (loss) income applicable to common stockholders | (23,360) | 96,941 |
Numerator for basic net (loss) income applicable to common stockholders | $ (23,360) | $ 96,941 |
Denominator for basic net (loss) income applicable to common stockholders | 3,255,648 | 2,894,287 |
Net (loss) income applicable to common stockholders - basic | $ (7.18) | $ 33.49 |
Net (loss) income per share - Diluted: | ||
Numerator for basic net (loss) income applicable to common stockholders | $ (23,360) | $ 96,941 |
Less: Warrant revaluation gain applicable to dilutive liability-classified warrants | (6,983) | |
Less: Future tranche right revaluation gain applicable to dilutive liability-classified future tranche rights | (118,803) | |
Numerator for diluted net (loss) income applicable to common stockholders | $ (23,360) | $ (28,845) |
Denominator for basic net (loss) income applicable to common stockholders | 3,255,648 | 2,894,287 |
Plus: Incremental shares underlying "in the money" liability-classified warrants outstanding | 5,492 | |
Plus: Incremental shares underlying "in the money" liability-classified future tranche rights outstanding | 48,880 | |
Denominator for diluted net income (loss) applicable to common stockholders | 3,255,648 | 2,948,659 |
Net (loss) income applicable to common stockholders - diluted | $ (7.18) | $ (9.78) |
Net Income (Loss) per Common _4
Net Income (Loss) per Common Share Applicable to Common Stockholders - Antidilutive securities (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive securities | ||
Total antidilutive securities | 7,584,936 | 853,540 |
Common stock options | ||
Antidilutive securities | ||
Total antidilutive securities | 406,174 | 306,000 |
Preferred stock options | ||
Antidilutive securities | ||
Total antidilutive securities | 1,030,693 | |
Restricted stock units and restricted stock awards | ||
Antidilutive securities | ||
Total antidilutive securities | 226,460 | 33,865 |
Common stock warrants | ||
Antidilutive securities | ||
Total antidilutive securities | 503,069 | 513,661 |
Preferred stock warrants | ||
Antidilutive securities | ||
Total antidilutive securities | 836,176 | |
Convertible preferred stock | ||
Antidilutive securities | ||
Total antidilutive securities | 4,582,364 | 14 |
Subsequent Events (Details)
Subsequent Events (Details) | Jan. 31, 2023 USD ($) D | Jan. 17, 2023 shares | Jan. 12, 2023 shares | Apr. 13, 2023 USD ($) person | Mar. 10, 2023 | Dec. 31, 2022 shares | Jul. 26, 2013 shares |
Subsequent Events | |||||||
Shares available for future issuance | 7,861,082 | ||||||
2013 Stock Incentive Plan | |||||||
Subsequent Events | |||||||
Common shares available for grant | 252,527 | 603,121 | |||||
Subsequent Events | |||||||
Subsequent Events | |||||||
Reverse stock split conversion ratio | 0.059 | ||||||
Percentage of cash and cash equivalent balance in segregated custodial accounts held by third party custodian | 56% | ||||||
Number of employees temporarily furloughed | person | 12 | ||||||
Percentage of the workforce of persons temporarily furloughed | 46% | ||||||
Minimum amount of base salary an executive officer is required to defer | $ | $ 200,000 | ||||||
Subsequent Events | Convertible Notes | |||||||
Subsequent Events | |||||||
Annual interest rate | 12% | ||||||
Aggregate amount | $ | $ 5,900,000 | ||||||
Consecutive trading days | D | 15 | ||||||
Subsequent Events | 2013 Stock Incentive Plan | |||||||
Subsequent Events | |||||||
Shares available for future issuance | 194,456 | ||||||
Subsequent Events | 2022 Equity Plan | |||||||
Subsequent Events | |||||||
Shares available for future issuance | 1,388,235 | ||||||
Subsequent Events | Minimum | |||||||
Subsequent Events | |||||||
Reverse stock split conversion ratio | 0.059 | ||||||
Subsequent Events | Maximum | |||||||
Subsequent Events | |||||||
Reverse stock split conversion ratio | 0.043 | ||||||
Subsequent Events | Series Z convertible preferred stock | |||||||
Subsequent Events | |||||||
Temporary Equity, preferred stock, shares outstanding | 80,656 | ||||||
Convertible preferred stock | 4,744,467 |