Clinical Trials - TX45 has advanced into Phase 2 clinical trial for patients with Group 2 PH-HFpEF, with the first site activated and screening open in August 2024[1] - The Phase 1a clinical trial results for TX45 in healthy volunteers are expected to be reported in September 2024[5] - The ongoing Phase 1b clinical trial results for TX45 are expected in mid-2025[11] - The company anticipates topline results from the Phase 2 clinical trial of TX45 in 2026[5] Financial Performance - The company reported a net loss of $12.7 million for Q2 2024, compared to a net loss of $10.5 million for Q2 2023[7] - Net loss for the three months ended June 30, 2024, was $12,671,000, compared to a net loss of $10,455,000 for the same period in 2023, indicating a year-over-year increase of 21.3%[19] - Comprehensive loss for the three months ended June 30, 2024, was $(12,679,000), compared to $(10,455,000) for the same period in 2023, representing an increase of 11.7%[19] Expenses - Research and development expenses for Q2 2024 were $7.1 million, a decrease from $8.8 million in Q2 2023[6] - General and administrative expenses increased to $4.3 million in Q2 2024 from $1.9 million in Q2 2023, primarily due to merger-related activities[7] - Total operating expenses for the three months ended June 30, 2024, were $11,421,000, compared to $10,631,000 for the same period in 2023, representing an increase of 7.4%[19] - Research and development expenses decreased to $7,074,000 for the three months ended June 30, 2024, from $8,766,000 in the same period of 2023, a reduction of 19.3%[19] - Interest expense decreased to $(28,000) for the three months ended June 30, 2024, from $(40,000) in the same period of 2023, a reduction of 30.0%[19] Cash and Assets - As of June 30, 2024, cash and cash equivalents were $185.1 million, expected to provide a cash runway into mid-2027[6] - Total assets as of June 30, 2024, were $19,390,000, compared to $39,399,000 as of December 31, 2023, showing a significant decrease of 50.8%[20] Equity and Shares - Total stockholders' equity (deficit) improved to $(166,367,000) as of June 30, 2024, from $(84,636,000) as of December 31, 2023, indicating a worsening of 96.5%[20] - Weighted-average common shares outstanding increased to 2,919,872 for the three months ended June 30, 2024, from 1,228,778 in the same period of 2023, an increase of 138.8%[19] Mergers and Acquisitions - The company completed a reverse merger with AVROBIO in June 2024, including a concurrent private placement of $130.7 million[3] Future Plans - The company plans to select a development candidate for its second program in Hereditary Hemorrhagic Telangiectasia (HHT) in the second half of 2024[5] Interest Income - Interest income increased to $318,000 for the three months ended June 30, 2024, compared to $224,000 for the same period in 2023, reflecting a growth of 42.0%[19] Liabilities - Change in fair value of SAFE liabilities was $(1,535,000) for the three months ended June 30, 2024, with no comparable figure for the same period in 2023[19]

Financial Performance - The company has incurred net losses of $12.7 million and $10.5 million for the three months ended June 30, 2024 and 2023, respectively, and $27.9 million and $24.9 million for the six months ended June 30, 2024 and 2023, respectively[93]. - The net loss for Q2 2024 was $12.7 million, representing a 21% increase compared to a net loss of $10.5 million in Q2 2023[116]. - The company incurred a net loss of $27.9 million for the six months ended June 30, 2024, compared to a net loss of $24.9 million for the same period in 2023[136]. - The company used $22.7 million and $20.5 million in operations for the six months ended June 30, 2024 and 2023, respectively[146]. Cash and Capital - The company had $185.1 million in cash and cash equivalents as of June 30, 2024, which is expected to fund operations for at least the next twelve months[92]. - The company had $185.1 million in cash and cash equivalents as of June 30, 2024, with an accumulated deficit of $118.5 million[132]. - The company has received $288.6 million in capital contributions since inception, primarily from sales of preferred stock and proceeds from the merger[92]. - Net cash provided by financing activities was $179.1 million for the six months ended June 30, 2024, primarily due to proceeds from the sale of shares and the Merger[139]. Expenses - Research and development expenses include costs related to employee salaries, clinical trials, and compliance with regulatory requirements[105]. - Research and development expenses for Q2 2024 were $7.1 million, a decrease of 19% from $8.8 million in Q2 2023[119]. - Research and development expenses for the six months ended June 30, 2024, totaled $17.9 million, down 18% from $21.8 million in the same period of 2023[125]. - General and administrative expenses increased by 133% to $4.3 million in Q2 2024 from $1.9 million in Q2 2023, primarily due to higher personnel and professional fees[120]. - General and administrative expenses increased to $6.5 million for the six months ended June 30, 2024, compared to $3.4 million in the same period of 2023, marking a 90% increase[129]. - The company anticipates a significant increase in general and administrative expenses in the future due to costs associated with operating as a public company[111]. Research and Development - The company plans to continue the clinical development of its lead product candidate TX45 and expand its clinical product pipeline[93]. - The company is focused on developing biologics to address GPCRs, which represent over 30% of all approved drugs[88]. - The proprietary GEODe™ technology platform aims to overcome challenges in GPCR-targeted drug discovery[89]. - The company expects to incur significant expenses and operating losses as it advances its research programs and product candidates, necessitating additional capital[131]. Merger and Corporate Structure - The merger with AVROBIO was completed on June 20, 2024, resulting in Legacy Tectonic securityholders owning approximately 38.5% of the outstanding shares on a diluted basis[99]. - The increase in professional and consultant fees in Q2 2024 was primarily related to merger-related activities, which rose by 489% to $2.5 million[120]. Liabilities and Obligations - Total contractual obligations and commitments as of June 30, 2024, amount to $3.724 million, including finance leases of $1.243 million and operating leases of $2.481 million[148]. - The company has a one-time license fee of $170,000 under the Harvard License Agreement, with installments due over three years[150]. - The company is obligated to pay up to $8.5 million in milestone payments for products granted FDA marketing authorization under the Harvard License Agreement[152]. - The company has a total of $4.8 million in milestone payments under the Alloy Therapeutics License Agreement for clinical trial advancements[154]. - The SAFE liabilities loss was $3.6 million due to the remeasurement of the SAFE liabilities to fair value during the six months ended June 30, 2024[130]. Interest Income - Interest income increased by 42% to $318,000 in Q2 2024 compared to $224,000 in Q2 2023, driven by higher interest rates[116]. - Interest income increased by $0.2 million for the six months ended June 30, 2024, attributed to rising interest rates[130]. Market Conditions - An immediate 10% change in market interest rates would not have a material effect on the fair market value of the company's investment portfolio[167].

Financial Performance - Net loss for the three months ended March 31, 2024, was $15,221,000, compared to a net loss of $14,445,000 for the same period in 2023, indicating an increase in loss of about 5.4%[6] - The company reported a comprehensive loss of $15,271,000 for the three months ended March 31, 2024, compared to a comprehensive loss of $14,445,000 for the same period in 2023, reflecting an increase of about 5.7%[6] - The total net loss attributable to common stockholders was $15,221,000, compared to a net loss of $14,445,000 for the same period in 2023, representing an increase of approximately 5.4%[81] Assets and Liabilities - Total current assets decreased from $30,884,000 as of December 31, 2023, to $20,558,000 as of March 31, 2024, representing a decline of approximately 33.5%[3] - Total liabilities increased from $43,408,000 as of December 31, 2023, to $50,102,000 as of March 31, 2024, an increase of about 15.3%[3] - Total stockholders' deficit increased from $84,636,000 as of December 31, 2023, to $99,574,000 as of March 31, 2024, an increase of about 17.6%[3] - Cash and cash equivalents decreased from $28,769,000 as of December 31, 2023, to $18,748,000 as of March 31, 2024, a reduction of approximately 34.9%[3] - Cash and cash equivalents decreased to $19.3 million as of March 31, 2024, down from $25.5 million at the end of 2023, representing a decrease of approximately 24%[12] - The aggregate liquidation preference of convertible preferred stock remained at $87,459,000 as of March 31, 2024, consistent with December 31, 2023[3] Research and Development - Research and development expenses for the three months ended March 31, 2024, were $10,818,000, down from $12,985,000 for the same period in 2023, a decrease of approximately 16.8%[6] - The company expects to continue incurring operating losses and negative cash flows as it develops its product candidates[16] - The company’s proprietary GEODe™ platform is currently in development, focusing on therapeutic proteins and antibodies targeting GPCRs[14] - The company anticipates needing to raise additional capital to fund its operations as it continues its research and development efforts[16] Cash Flow and Operating Activities - The company utilized $9.3 million in cash from operating activities during the first quarter of 2024, an improvement from $10.8 million used in the same period of 2023[12] - The Company paid $381,000 in operating cash flows for operating leases during the three months ended March 31, 2024, compared to $370,000 in the same period of 2023[53] Equity and Stock - The weighted-average common shares outstanding increased from 2,222,800 for the three months ended March 31, 2023, to 2,608,740 for the same period in 2024, an increase of approximately 17.3%[6] - The Company has issued a total of 6,825,483 shares of Preferred Stock with a carrying value of $80,627,000 as of March 31, 2024[57] - The Company has authorized the issuance of up to 11,947,558 shares of common stock, with 2,637,120 shares issued and outstanding as of March 31, 2024[67] - The 2019 Equity Incentive Plan allows for the issuance of up to 1,991,264 shares of common stock, with stock options being the only equity awards issued to date[68] - The total stock-based compensation expense for the three months ended March 31, 2024, was $321,000, up from $275,000 in 2023, indicating a year-over-year increase of approximately 16.7%[77] Mergers and Acquisitions - The company completed a merger with AVROBIO, Inc. on June 20, 2024, receiving $77.3 million in cash and completing the sale of $96.6 million in common stock[16] - The company entered into a merger agreement with AVROBIO on January 30, 2024, with the merger closing on June 20, 2024, treating AVROBIO as the acquired company for financial reporting purposes[91] - Concurrently with the merger, certain investors purchased 7,790,889 shares of the company's common stock for an aggregate purchase price of approximately $96.6 million[92] Fair Value and Liabilities - The company incurred a change in the fair value of SAFE liabilities amounting to a loss of $2,075,000 for the three months ended March 31, 2024[6] - As of March 31, 2024, the SAFE liabilities were valued at $32.59 million, up from $30.52 million as of December 31, 2023, reflecting a fair value adjustment of $2.08 million[31] - The fair value of the SAFEs issued in October 2023 was recognized at $10.4 million, with subsequent measurement resulting in total SAFE liabilities fair value of $32.6 million recorded in the statement of operations[87] Commitments and Expenses - The Company has commitments for annual maintenance fees and royalty payments under its agreements with Harvard and Alloy Therapeutics, which may total in the low seven digits annually[42][46] - The Company has a remaining installment of $56,668 due to Harvard in July 2024 as part of a license agreement[42] - Total lease costs for the three months ended March 31, 2024, amounted to $921,000, an increase of 4.3% compared to $883,000 for the same period in 2023[52] Depreciation and Fair Value Adjustments - Depreciation expense for the three months ended March 31, 2024, was $0.3 million, compared to $0.2 million for the same period in 2023[36] - The company recorded a change in the fair value of SAFE liabilities amounting to $2.1 million for the first quarter of 2024[12] Tax Assets - The company has maintained a full valuation allowance against its net deferred tax assets as of March 31, 2024, due to cumulative net losses and the likelihood of not realizing the benefits of these assets[79]

Group 1 - Avrobio is preparing for a merger with Tectonic Therapeutic, which is set to take place today after investor approval [1] - A one-for-12 reverse stock split will occur after market close today, with shares trading on a split-adjusted basis starting tomorrow [2] - The stock ticker will change from AVRO to TECX following the merger, with Tectonic Therapeutic becoming a wholly-owned subsidiary of Avrobio [2] Group 2 - AVRO stock experienced slight increases in the morning, but there were reports of a significant drop in pre-market trading, possibly due to merger and reverse stock split plans [2]

Financial Performance - The company has incurred a net loss of $6.8 million for the three months ended March 31, 2024, compared to a net loss of $25.0 million for the same period in 2023, resulting in an accumulated deficit of $484.1 million as of March 31, 2024[112]. - Net loss for the three months ended March 31, 2024, was $6.8 million, compared to a net loss of $25.0 million for the same period in 2023, an improvement of $18.2 million[129]. - Interest income increased to $1.1 million for the three months ended March 31, 2024, from $0.3 million for the same period in 2023, an increase of $0.8 million[132]. - Cash and cash equivalents as of March 31, 2024, were $90.5 million[140]. - Net cash used in operating activities was $7.6 million for the three months ended March 31, 2024, compared to $20.3 million for the same period in 2023[143]. Research and Development - Research and development expenses totaled $683,000 for the three months ended March 31, 2024, significantly down from $17.3 million for the same period in 2023[120]. - Research and development expenses decreased by approximately $16.7 million to $0.7 million for the three months ended March 31, 2024, from $17.3 million for the same period in 2023[130]. - The company has terminated all treatment-related and long-term follow-up clinical studies for its Gaucher disease and Fabry disease programs, and discontinued its Hunter syndrome gene therapy program[107]. - The company expects substantial increases in expenses if product development resumes, particularly for preclinical activities and clinical trials[146]. - The establishment of a sales, marketing, and distribution infrastructure is necessary for the commercialization of product candidates[147]. Strategic Plans and Mergers - The company plans to halt development of its gene therapy programs and explore strategic alternatives, including potential mergers or acquisitions[106]. - A merger agreement has been entered into with Tectonic, with certain investors agreeing to purchase shares at a price of $12.39908 per share, totaling approximately $130.7 million in private financings[108]. - The merger is subject to approval by stockholders and is conditioned upon receiving cash proceeds of not less than $114.5 million[109]. - Future operations are highly dependent on the success of the merger, with no assurances that it will be consummated[110]. Funding and Expenses - The company has received gross cash proceeds of $428.1 million from sales of common stock through its IPO and follow-on offerings, and $87.5 million from the sale of its cystinosis gene therapy program[111]. - The company has not generated any product revenue since its inception in 2015 and relies on external funding to support operations[111]. - The company anticipates an increase in general and administrative expenses as it resumes development of product candidates and increases headcount[125]. - General and administrative expenses were $7.3 million for the three months ended March 31, 2024, compared to $7.9 million for the same period in 2023, a decrease of $0.6 million[131]. - Total operating expenses decreased by $17.3 million to $7.9 million for the three months ended March 31, 2024, from $25.2 million for the same period in 2023[129]. Currency and Financial Risk - The company recognized foreign currency transaction losses of $13, and $28 for the three months ended March 31, 2024, and 2023, respectively[154]. - A 10% change in the exchange rate between the U.S. dollar and other currencies is not expected to materially impact the financial position or results of operations[154]. - The company may finance cash needs through equity offerings, debt financings, and collaboration agreements, which could involve relinquishing valuable rights[148]. - The company has not entered into any foreign currency hedging contracts to mitigate exposure to foreign currency exchange risk[155]. Operational Considerations - Additional personnel will need to be hired and retained to support clinical, medical, and commercial operations[147]. - The company may need to delay or limit product development if additional funds are not raised when needed[148]. - There were no material changes to the company's critical accounting policies during the three months ended March 31, 2024[150].

Merger and Ownership Structure - AVROBIO securityholders are expected to own approximately 22.3% of the combined company, while former Tectonic securityholders are expected to own approximately 39.8%[61]. - The merger agreement includes an exchange ratio based on AVROBIO's net cash at closing, anticipated to be between $65.0 million and $75.0 million[61]. - If AVROBIO's net cash is below $65.0 million, the exchange ratio will be adjusted, resulting in a smaller ownership percentage for AVROBIO stockholders[61]. - The merger cannot be consummated without the approval of certain proposals by AVROBIO stockholders[63]. - Following the merger, AVROBIO stockholders are expected to own approximately 22.3% of the combined company, while former Tectonic stockholders are expected to own approximately 39.8%[67]. - AVROBIO anticipates its net cash at closing will be between $65.0 million and $75.0 million, with ownership percentages based on an assumption of $65.0 million[67]. - If the merger is not completed, AVROBIO may be required to pay Tectonic a termination fee of $2,712,500, or Tectonic may owe AVROBIO $4,900,000[67]. - The completion of the merger is subject to various conditions, including approval from both AVROBIO and Tectonic stockholders[75]. Financial Performance and Capital Requirements - AVROBIO incurred a net loss of $105.9 million for the year ended December 31, 2022, and a net income (loss) of $12.2 million for the year ended December 31, 2023[78]. - AVROBIO has received a cash payment of $87.5 million from Novartis for the sale of its cystinosis gene therapy program, which has allowed the company to pay off all outstanding amounts under its Term Loan Agreement[78]. - The combined company may need to raise additional capital, potentially causing significant dilution to existing shareholders[64]. - AVROBIO's future capital requirements will depend on various factors, including the costs associated with drug discovery, clinical trials, and potential regulatory reviews[82]. - The company may need additional funding to resume development of its product candidates, which may not be available on acceptable terms[82]. - AVROBIO's exploration of strategic alternatives may involve entering into acquisitions or mergers, which could result in dilution for existing stockholders[83]. Strategic Alternatives and Operational Focus - In July 2023, AVROBIO announced a comprehensive exploration of strategic alternatives to maximize stockholder value, including a proposed merger with Tectonic announced in January 2024[79]. - AVROBIO's management and employees are currently focused on the merger, which may divert attention from day-to-day operations[74]. - The company has halted further development of its programs and conducted reductions in force while evaluating strategic alternatives[82]. - AVROBIO's cash conservation activities may lead to unintended consequences, including employee attrition and reduced morale[78]. - The company has implemented workforce reductions to conserve capital expenditures, but may not realize the anticipated savings or operational efficiencies from these restructuring efforts[87]. Clinical Development and Regulatory Challenges - AVROBIO's clinical development has been halted, and the commercially-scalable plato platform has been used in only two clinical trials[96]. - The company has limited experience in preparing and submitting regulatory filings, having never completed a pivotal or registrational clinical trial[92]. - The regulatory approval process for AVROBIO's novel product candidates may be more expensive and time-consuming compared to other therapies, with limited prior approvals in the HSC gene therapy space[90]. - AVROBIO's ability to conduct clinical trials may be impacted by changes in hospital policies, government regulations, and disruptions in third-party services[89]. - The company may face significant delays in resuming clinical trials due to challenges in patient enrollment, particularly for rare diseases[94]. Intellectual Property and Competitive Landscape - AVROBIO's ability to compete effectively depends on maintaining proprietary technology and manufacturing processes[129]. - The company may face substantial litigation expenses and resource diversion if claims of patent infringement arise[128]. - AVROBIO's reliance on trade secrets and confidentiality agreements poses risks, as these can be difficult to enforce[129]. - Changes in U.S. patent law, particularly the Leahy-Smith America Invents Act, could increase uncertainties and costs related to patent applications and enforcement, potentially adversely affecting AVROBIO's business[130]. - AVROBIO's ability to protect its intellectual property may be compromised if it cannot secure patent term extensions or data exclusivity for its product candidates, which could lead to reduced revenue[132]. Market and Economic Conditions - The market price of AVROBIO common stock is subject to significant fluctuations, particularly in the context of the merger's completion[66]. - AVROBIO's stock price may decline if the market assumes the merger will not be completed[73]. - The company is subject to provisions in its charter and bylaws that could delay or prevent a change in control, including the authorization of "blank check" preferred stock and a classified board of directors[138]. - AVROBIO's financial condition could be adversely affected by unfavorable global economic conditions, including the impacts of the COVID-19 pandemic and geopolitical events[141]. - The company has faced cybersecurity threats in the past, including a cyberattack in 2017 that led to the theft of funds, which could disrupt operations if similar incidents occur in the future[141]. Compliance and Regulatory Risks - AVROBIO is subject to various U.S. and foreign healthcare laws, and non-compliance could result in substantial penalties and reputational harm[120]. - Compliance with data protection laws, including GDPR, is critical, as violations could result in fines up to 4% of global revenues or €20 million[122]. - The company may need to enhance its business processes and systems to support future growth and ensure compliance with regulatory requirements[120]. - AVROBIO's suppliers have not undergone FDA approval processes, which poses risks for the company's ability to meet regulatory requirements[109]. Employee and Management Issues - AVROBIO has implemented workforce reductions, including a 50% reduction in July 2023 and further cuts in October, November, and December 2023, impacting employee morale and retention[118]. - The company is currently led by an interim CEO following the resignation of the former President and CEO on May 1, 2023, with no timeline for hiring a permanent replacement[118]. - AVROBIO's ability to retain key personnel is critical for its future success, with a competitive landscape for skilled employees in the biotechnology sector[118].

Merger Details - AVROBIO and Tectonic Therapeutic have entered into a definitive merger agreement in an all-stock transaction, with AVROBIO acquiring 100% of Tectonic's equity [1] - The combined company will operate under the name Tectonic Therapeutic, Inc and trade on Nasdaq under the ticker symbol "TECX" [1] - Tectonic has raised $130.7 million in a private placement, with the combined company expected to have approximately $165 million in cash and cash equivalents at closing [1] Strategic Rationale - The merger enhances Tectonic's ability to advance its clinical-stage Fc-relaxin fusion protein, TX45, and other pipeline assets [2] - Tectonic's GEODeTM platform enables the discovery of biologics targeting challenging GPCRs, which are central to human biology and the target of over 30% of approved drugs [2][3] - The combined company is expected to have sufficient cash to fund operations into mid-2027 [1] Tectonic's Pipeline - TX45, a potential best-in-class Fc-relaxin fusion protein, is being developed for Group 2 Pulmonary Hypertension in HFpEF patients, affecting over 600,000 people in the US [4] - Phase 1a data for TX45 has shown promising PK/PD effects, with Phase 1b and Phase 2 data expected in 2025 and 2026, respectively [5] - Tectonic's second program targets Hereditary Hemorrhagic Telangiectasia (HHT), affecting approximately 75,000 patients in the US, with human studies planned for late 2025 to early 2026 [5] - A third program focuses on fibrosis using a bispecific approach to inhibit two different receptors [5] Financial and Organizational Structure - Post-merger, AVROBIO shareholders will own approximately 22.3% of the combined company, while Tectonic shareholders will own approximately 40.2% [6] - The combined company will be led by Tectonic's management team, with one AVROBIO board member joining the new board [7] - The merger is expected to close in Q2 2024, subject to shareholder approvals and other customary closing conditions [7] Advisors - Leerink Partners is serving as exclusive financial advisor to Tectonic, with Cooley LLP as legal counsel [8] - Piper Sandler is acting as capital markets advisor to Tectonic, while TD Cowen and Houlihan Lokey are serving as financial advisors to AVROBIO [8]

Financial Performance - The company has incurred a net loss of $20.9 million for the nine months ended September 30, 2023, compared to a net loss of $80.9 million for the same period in 2022, indicating a significant improvement [131]. - The company reported a net income of $20.9 million for the nine months ended September 30, 2023, compared to a net loss of $80.9 million for the same period in 2022, an improvement of $101.8 million [151]. - As of September 30, 2023, the company has an accumulated deficit of $468.5 million, reflecting ongoing financial challenges [131]. Expenses - The total operating expenses for the three months ended September 30, 2023, were $21.1 million, down from $23.0 million in the same period in 2022 [145]. - General and administrative expenses were $18.7 million for the nine months ended September 30, 2023, compared to $26.1 million for the same period in 2022, a decrease of $7.4 million [153]. - Total operating expenses decreased to $62.0 million for the nine months ended September 30, 2023, from $80.2 million for the same period in 2022, a reduction of $18.1 million [151]. - The company anticipates continued increases in general and administrative expenses due to costs associated with being a public company and exploring strategic alternatives [141]. Research and Development - The total research and development expenses for the three months ended September 30, 2023, were $14.8 million, a decrease of $1.1 million from $15.9 million in the same period in 2022 [145]. - Research and development expenses decreased by approximately $10.7 million to $43.3 million for the nine months ended September 30, 2023, from $54.0 million for the same period in 2022 [152]. - The company has terminated all treatment-related and long-term follow-up clinical studies for its Gaucher disease and Fabry disease programs as part of its strategic review [129]. - The company currently has three gene therapy product candidates, none of which are in active clinical development as of the filing date [129]. - The company has halted the development of its gene therapy programs and is exploring strategic alternatives, including potential acquisitions or mergers [128]. Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2023, were $105.8 million, indicating a strong liquidity position [165]. - Net cash used in operating activities was $55.2 million for the nine months ended September 30, 2023, compared to $73.5 million for the same period in 2022, reflecting improved cash flow management [168]. - Net cash provided by investing activities was $84.9 million for the nine months ended September 30, 2023, compared to cash used of $0.3 million for the same period in 2022, primarily due to the sale of the cystinosis program [169]. - Net cash used by financing activities was $16.1 million for the nine months ended September 30, 2023, compared to cash provided of $0.2 million for the same period in 2022, primarily due to the repayment of the Term Loan Agreement [170]. Other Income and Gains - The company recognized a gain on asset sale of $83.7 million for the nine months ended September 30, 2023, net of $3.8 million in transaction costs [154]. - Interest income for the three months ended September 30, 2023, was $1.4 million, a significant increase from $111,000 in the same period in 2022 [145]. - Other income, net, was $1.1 million for the nine months ended September 30, 2023, compared to $(0.7) million for the same period in 2022, primarily due to the elimination of interest expense related to the Term Loan Agreement [156]. Future Outlook - The company expects substantial increases in expenses if product development resumes, particularly for clinical trials and preclinical studies, as well as for hiring additional personnel and expanding infrastructure [171]. - The company plans to finance cash needs through equity offerings, debt financings, collaboration agreements, and other funding sources, which may involve relinquishing rights to technologies or revenue streams [172]. Foreign Currency Exposure - Foreign currency transaction losses were $116 thousand for the nine months ended September 30, 2023, compared to $70 thousand for the same period in 2022, primarily due to transactions in currencies other than the U.S. dollar [179]. - The company has not entered into any foreign currency hedging contracts to mitigate exposure to foreign currency exchange risk [180].

Financial Performance - The company has not generated any product revenue to date and has incurred significant operating losses, with a net loss of $42.5 million for the six months ended June 30, 2023, compared to a net loss of $57.9 million for the same period in 2022[125]. - The company has an accumulated deficit of $446.9 million as of June 30, 2023[125]. - Net income for Q2 2023 was $67.5 million, a significant increase of $95.5 million compared to a net loss of $28.1 million in Q2 2022[142]. - For the six months ended June 30, 2023, total operating expenses decreased to $40.9 million from $57.2 million in the same period of 2022, reflecting a reduction of $16.2 million[149]. Cash and Funding - As of June 30, 2023, the company had cash and cash equivalents of $124.7 million, which is expected to fund operations at least into the fourth quarter of 2024[129]. - The company has received gross cash proceeds of $428.1 million from sales of common stock through its initial public offering and follow-on offerings[124]. - The company may need substantial additional funding to support operations and pursue growth strategies, relying on external sources for financing[126]. - The company repaid all outstanding amounts under the Term Loan Agreement in Q2 2023, resulting in a net cash used by financing activities of $16.3 million for the six months ended June 30, 2023[164]. - Operating activities used $34.9 million of cash for the six months ended June 30, 2023, compared to $57.1 million in the same period of 2022, reflecting improved cash flow management[162]. Research and Development - Research and development expenses totaled $11.1 million for the three months ended June 30, 2023, a decrease from $18.9 million for the same period in 2022[134]. - The company has incurred research and development expenses related to various programs, with significant costs expected to increase if development resumes[134]. - Research and development expenses decreased by approximately $7.7 million to $11.1 million for Q2 2023, down from $18.9 million in Q2 2022, driven by reductions in development, manufacturing, and personnel-related costs[143]. - The company is focused on three HSC gene therapy programs, with AVR-RD-02 in a Phase 1/2 clinical trial for Gaucher disease type 1 and type 3[122]. Strategic Plans - The company plans to halt development of its programs and explore strategic alternatives, which may include acquisitions or mergers[122]. - The company anticipates increased general and administrative expenses due to exploration of potential strategic alternatives and preparation for commercial operations[139]. - The company plans to expand its infrastructure and hire additional personnel to support product development and commercialization[166]. - The company expects to incur significant commercialization expenses if regulatory approval for product candidates is obtained[166]. Currency and Accounting - Foreign currency transaction losses for the six months ended June 30, 2023, were $65,000, compared to $40,000 for the same period in 2022[174]. - The company has not entered into foreign currency hedging contracts to mitigate exchange rate risks[175]. - A 10% change in exchange rates is not expected to materially impact the company's financial position[174]. - There were no material changes to the company's critical accounting policies during the six months ended June 30, 2023[169]. - The company is classified as an "emerging growth company" and may take advantage of certain reporting exemptions until it no longer qualifies[170].

Financial Performance - The company reported net losses of $25.0 million for the three months ended March 31, 2023, compared to $29.8 million for the same period in 2022, resulting in an accumulated deficit of $514.4 million as of March 31, 2023[121]. - Net loss for the three months ended March 31, 2023, was $24.96 million, an improvement of $4.88 million compared to a net loss of $29.83 million for the same period in 2022[140]. - Net cash used in operating activities was $20.3 million for the three months ended March 31, 2023, compared to $28.0 million for the same period in 2022[149]. - Total other income (expense), net, was $0.3 million for the three months ended March 31, 2023, compared to $(0.4) million for the same period in 2022, primarily due to increased interest income[140]. Funding and Cash Position - The company has raised a total of $428.1 million from sales of common stock through its initial public offering and follow-on offerings, along with $87.5 million from preferred stock sales[120]. - As of March 31, 2023, the company had cash and cash equivalents of $72.3 million, expected to fund operations into the first quarter of 2024[125]. - Cash and cash equivalents as of March 31, 2023, were $72.3 million, expected to fund operating expenses into the first quarter of 2024[146]. - As of March 31, 2023, approximately $26.5 million of common stock remained available for future issuance under the ATM facility[144]. - The company has drawn $15.0 million in term loans under its Term Loan Agreement, with a repayment schedule starting November 1, 2024[145]. Research and Development - The total research and development expenses for the three months ended March 31, 2023, were $17.3 million, a decrease from $19.3 million in the same period of 2022[129]. - Research and development expenses decreased by approximately $1.9 million to $17.3 million for the three months ended March 31, 2023, from $19.3 million for the same period in 2022[138]. - The company is currently focused on four HSC gene therapy programs targeting rare diseases, with significant market opportunities estimated at approximately $3.5 billion in worldwide net sales in 2022[116]. - AVR-RD-02 is in a Phase 1/2 clinical trial for Gaucher disease type 1, with five patients dosed and six enrolled as of March 20, 2023, and a global Phase 2/3 trial planned for the second half of 2023[118]. - The company plans to initiate a Phase 1/2 clinical trial for AVR-RD-04 for cystinosis in the second half of 2023, following the completion of enrollment in a collaborator-sponsored trial[119]. - The company expects expenses to increase substantially as it advances preclinical activities and clinical trials of its product candidates[152]. Operating Expenses - The company anticipates significant increases in general and administrative expenses as it expands headcount and prepares for potential commercialization of its product candidates[134]. - General and administrative expenses were $7.9 million for the three months ended March 31, 2023, compared to $10.2 million for the same period in 2022, a decrease of $2.3 million[139]. - The company has incurred significant operating losses and will require substantial additional funding to support ongoing operations and growth strategies[123]. Currency and Interest Rate Exposure - The company recognized foreign currency transaction losses of $28 thousand and $46 thousand for the three months ended March 31, 2023, and 2022, respectively[161]. - The company believes that a 10% change in the exchange rate between the U.S. dollar and other currencies would not have a material impact on its financial position or results of operations[161]. - The company has not entered into any foreign currency hedging contracts to mitigate exposure to foreign currency exchange risk[162]. - An immediate 100 basis point change in interest rates would not have a material effect on the fair market value of the company's investment portfolio due to its short-term duration and low risk profile[160].