Deep Insights Advancing Impactful Medicines August 2022 ScholarRock Disclaimers Various statements in this presentation concerning the future expectations, plans and prospects of Scholar Rock, Inc. ("Scholar Rock"), including without limitation, Scholar Rock's expectations regarding its strategy, its product candidate selection and development timing, including timing for the initiation of and reporting results from its clinical trials for apitegromab, SRK-181, and other product candidates and indication se ...

Deep Insights Advancing Impactful Medicines August 2022 ScholarRock Disclaimers Various statements in this presentation concerning the future expectations, plans and prospects of Scholar Rock, Inc. ("Scholar Rock"), including without limitation, Scholar Rock's expectations regarding its strategy, its product candidate selection and development timing, including timing for the initiation of and reporting results from its clinical trials for apitegromab, SRK-181, and other product candidates and indication se ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _ TO _ COMMISSION FILE NUMBER 001-38501 ______________________________________________ SCHOLAR ROCK HOLDING CORPORATION (Exact name of registrant as spe ...

[PART I - FINANCIAL INFORMATION](index=8&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the unaudited consolidated financial statements and related disclosures for the reporting period [Item 1. Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, with detailed notes on business, accounting policies, and financial instruments [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Consolidated Balance Sheets (in thousands) | Item | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Cash and cash equivalents | $100,175 | $212,835 | | Marketable securities | $110,036 | $40,159 | | Total current assets | $228,586 | $265,319 | | Total assets | $265,977 | $304,445 | | Deferred revenue | $— | $33,193 | | Total liabilities | $94,661 | $132,371 | | Total stockholders' equity | $171,316 | $172,074 | | Common stock outstanding | 35,300,823 | 35,209,099 | [Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This statement outlines the company's financial performance over a period, showing revenue, expenses, net loss, and comprehensive loss Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Item | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Revenue | $33,193 | $4,708 | | Research and development expenses | $29,366 | $22,549 | | General and administrative expenses | $10,760 | $9,366 | | Total operating expenses | $40,126 | $31,915 | | Loss from operations | $(6,933) | $(27,207) | | Other income (expense), net | $(1,017) | $(464) | | Net loss | $(7,950) | $(27,671) | | Net loss per share, basic and diluted | $(0.21) | $(0.76) | | Weighted average common shares outstanding | 37,456,574 | 36,380,438 | | Comprehensive loss | $(8,067) | $(27,646) | [Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement details changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit Consolidated Statements of Stockholders' Equity (in thousands) | Item | Balance at December 31, 2021 (in thousands) | Balance at March 31, 2022 (in thousands) | | :-------------------------------- | :---------------------------------------- | :--------------------------------------- | | Common Stock (Shares) | 35,209,099 | 35,300,823 | | Common Stock (Amount) | $35 | $35 | | Additional Paid-in Capital | $548,204 | $555,513 | | Accumulated Other Comprehensive Loss | $(35) | $(152) | | Accumulated Deficit | $(376,130) | $(384,080) | | Total Stockholders' Equity | $172,074 | $171,316 | **Key Changes (Three Months Ended March 31, 2022, in thousands):** * Unrealized loss on marketable securities: $(117) * Exercise of stock options: $481 * Equity-based compensation expense: $6,828 * Net loss: $(7,950) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash inflows and outflows from operating, investing, and financing activities over a period Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net cash used in operating activities | $(42,565) | $(26,544) | | Net cash (used in) provided by investing activities | $(70,576) | $22,557 | | Net cash provided by financing activities | $481 | $2,737 | | Net decrease in cash, cash equivalents and restricted cash | $(112,660) | $(1,250) | | Cash, cash equivalents and restricted cash, end of period | $102,673 | $161,606 | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements [1. Nature of the Business](index=12&type=section&id=1.%20Nature%20of%20the%20Business) This note describes the company's core business, product candidates, and financing strategies - Scholar Rock Holding Corporation is a **biopharmaceutical company** focused on the discovery and development of innovative medicines for serious diseases by targeting **protein growth factors**[22](index=22&type=chunk) - Key product candidates include **apitegromab for Spinal Muscular Atrophy (SMA)**, currently in pivotal **Phase 3 clinical trial**, and **SRK-181 for cancers resistant to checkpoint inhibitor therapies**, in **Phase 1 clinical trial**[22](index=22&type=chunk) - The company has primarily financed operations through **equity financings**, research and development **collaboration agreements** (Janssen, Gilead), and **debt**, and anticipates continued **significant operating losses**[23](index=23&type=chunk)[25](index=25&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and estimates used in preparing the financial statements - The unaudited consolidated financial statements are prepared in accordance with **SEC rules** and **GAAP**, with **no material changes** to significant accounting policies since December 31, 2021[26](index=26&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk) - Management uses **estimates and judgments** in financial reporting, and the adoption of ASU 2016-13 (Credit Losses) is **not expected to have a material impact**[31](index=31&type=chunk)[32](index=32&type=chunk) Cash, Cash Equivalents and Restricted Cash Reconciliation (in thousands) | Item | As of March 31, 2022 | As of March 31, 2021 | | :-------------------------- | :------------------- | :------------------- | | Cash and cash equivalents | $100,175 | $159,108 | | Restricted cash | $2,498 | $2,498 | | **Total** | **$102,673** | **$161,606** | [3. Fair Value of Financial Assets and Liabilities](index=15&type=section&id=3.%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) This note details the fair value measurements of financial assets and liabilities, categorized by valuation input levels Fair Value Measurements at March 31, 2022 (in thousands) | Asset Type | Total | Level 1 | Level 2 | Level 3 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Money market funds | $93,444 | $93,444 | $— | $— | | U.S. Treasury obligations | $110,036 | $110,036 | $— | $— | | **Total assets** | **$203,480** | **$203,480** | **$—** | **$—** | Fair Value Measurements at December 31, 2021 (in thousands) | Asset Type | Total | Level 1 | Level 2 | Level 3 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Money market funds | $188,493 | $188,493 | $— | $— | | U.S. Treasury obligations | $40,159 | $40,159 | $— | $— | | **Total assets** | **$228,652** | **$228,652** | **$—** | **$—** | - Cash, cash equivalents, and marketable securities are classified as **Level 1 assets**, valued using quoted market prices. The carrying value of debt approximates its fair value based on **Level 3**[33](index=33&type=chunk)[34](index=34&type=chunk) [4. Marketable Securities](index=15&type=section&id=4.%20Marketable%20Securities) This note provides details on the company's marketable securities, including amortized cost, unrealized gains/losses, and fair value Marketable Securities at March 31, 2022 (in thousands) | Type | Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | | :----------------------------- | :------------- | :--------------- | :---------------- | :------------------- | | U.S. Treasury obligations | $110,188 | $— | $(152) | $110,036 | | **Total available-for-sale** | **$110,188** | **$—** | **$(152)** | **$110,036** | Marketable Securities at December 31, 2021 (in thousands) | Type | Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | | :----------------------------- | :------------- | :--------------- | :---------------- | :------------------- | | U.S. Treasury obligations | $40,194 | $— | $(35) | $40,159 | | **Total available-for-sale** | **$40,194** | **$—** | **$(35)** | **$40,159** | - The aggregate fair value of marketable securities with unrealized losses increased from **$30.2 million** at December 31, 2021, to **$105.2 million** at March 31, 2022. These losses are considered **temporary**, and the company intends to hold these investments until recovery or maturity[36](index=36&type=chunk) [5. Accrued Expenses](index=17&type=section&id=5.%20Accrued%20Expenses) This note breaks down the components of accrued expenses, including R&D, payroll, and professional services Accrued Expenses (in thousands) | Category | As of March 31, 2022 | As of December 31, 2021 | | :---------------------------------- | :------------------- | :---------------------- | | Accrued external R&D expense | $9,181 | $8,428 | | Accrued payroll and related expenses | $4,467 | $7,147 | | Accrued professional and consulting | $1,444 | $1,421 | | Accrued other | $846 | $460 | | **Total** | **$15,938** | **$17,456** | [6. Equity-Based Compensation](index=17&type=section&id=6.%20Equity-Based%20Compensation) This note details equity-based compensation expenses and unrecognized compensation for restricted stock units and stock options Equity-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $3,407 | $2,110 | | General and administrative | $3,421 | $2,563 | | **Total** | **$6,828** | **$4,673** | Unrecognized Equity-Based Compensation Expense (as of March 31, 2022, in thousands) | Award Type | Unrecognized Expense | Weighted Average Remaining Period of Recognition (years) | | :-------------------- | :------------------- | :---------------------------------------------------- | | Restricted Stock Units | $24,661 | 3.5 | | Stock Options | $51,298 | 2.6 | | **Total** | **$75,959** | | - During Q1 2022, **787,038 restricted stock units** were granted (weighted average fair value **$18.15**), and **49,595 units vested** (total fair value **$1.0 million**). Also, **902,092 stock options** were granted (weighted average fair value **$13.20**), and **42,129 options were exercised**[39](index=39&type=chunk)[40](index=40&type=chunk) [7. Commitments and Contingencies](index=19&type=section&id=7.%20Commitments%20and%20Contingencies) This note outlines the company's operating lease commitments, sublease agreements, and legal proceedings - The company has operating leases for office and laboratory space in Cambridge, Massachusetts, including a sublease agreement for one facility. The **620 Memorial Drive lease expires in September 2023**, with a sublease to Orna Therapeutics, Inc. until August 2023[42](index=42&type=chunk)[43](index=43&type=chunk) - The **301 Binney Street lease**, for the new corporate headquarters, **expires in August 2025**, with an annual base rent of **$6.9 million** (subject to annual increases) and included **$14.1 million in tenant improvement incentives**[44](index=44&type=chunk) Lease Costs (Three Months Ended March 31, 2022, in thousands) | Cost Type | Amount | | :------------------------ | :----- | | Operating lease cost | $2,161 | | Variable lease cost | $376 | | **Total lease cost** | **$2,537** | | Sublease income | $0.7 million | | Operating cash flows used for operating leases | $2,263 | - **No material legal proceedings** were reported during the three months ended March 31, 2022, and 2021[47](index=47&type=chunk) [8. Debt](index=21&type=section&id=8.%20Debt) This note details the company's loan and security agreement, funding tranches, maturity, and interest rate terms - The company entered into a **$50.0 million Loan and Security Agreement** with Oxford Finance LLC and Silicon Valley Bank in October 2020[48](index=48&type=chunk) - **Tranche 1 ($25.0 million)** was funded in October 2020, and **Tranche 2 ($25.0 million)** was funded in December 2021 after meeting revised milestones (public announcement of Phase 3 SAPPHIRE clinical trial design and initiation of Phase 1 DRAGON Part B)[48](index=48&type=chunk) - The loan matures on **May 1, 2025**, with interest-only payments through November 2022, and principal payments commencing in December 2022. The interest rate is the greater of Wall Street Journal prime rate plus **4.60%** or **7.85% per annum**[48](index=48&type=chunk) [9. Agreements](index=21&type=section&id=9.%20Agreements) This note discusses the termination of the Gilead collaboration agreement and the recognition of associated revenue - The three-year Master Collaboration Agreement with Gilead Sciences, Inc., focused on TGFβ inhibitors for fibrotic diseases, was **terminated by Gilead on January 6, 2022**[49](index=49&type=chunk)[53](index=53&type=chunk) - Upon termination, the company recognized **$33.2 million in revenue** attributable to the material rights from the Gilead options in Q1 2022. All revenue related to this agreement has now been recognized[53](index=53&type=chunk) - A **$25.0 million preclinical milestone** was achieved in December 2019 for successful demonstration of efficacy in preclinical in vivo proof-of-concept studies[51](index=51&type=chunk) [10. Net Loss per Share](index=23&type=section&id=10.%20Net%20Loss%20per%20Share) This note explains the calculation of basic and diluted net loss per share, considering anti-dilutive securities - **Basic and diluted net loss per share are the same** due to the company incurring a net loss, making potentially dilutive securities anti-dilutive[54](index=54&type=chunk) - As of March 31, 2022, **2,179,487 pre-funded warrants** were outstanding but unexercised, and **5,612,593 common stock equivalents** (restricted stock units and stock options) were excluded from the diluted net loss per share calculation[54](index=54&type=chunk)[55](index=55&type=chunk) [11. Subsequent Events](index=23&type=section&id=11.%20Subsequent%20Events) This note discloses significant events occurring after the balance sheet date, including a business restructuring and executive resignation - On May 16, 2022, the company announced a business restructuring, including a **25% workforce reduction (39 positions)**, to prioritize clinical stage assets. This is expected to incur **$1.7 million to $2.3 million in cash-based severance costs** and non-cash equity modification expenses[56](index=56&type=chunk) - The Chief Medical Officer, Yung Chyung, resigned effective **June 30, 2022**, to explore new career opportunities[409](index=409&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, and liquidity, highlighting revenue from Gilead collaboration termination, rising R&D expenses, and the impact of workforce reduction [Overview](index=24&type=section&id=Overview) This section provides a high-level introduction to the company's biopharmaceutical focus, key product candidates, and financial position - Scholar Rock is a **biopharmaceutical company** focused on discovering and developing innovative medicines by targeting **protein growth factors** for serious diseases, including neuromuscular disorders, cancer, and fibrosis[61](index=61&type=chunk)[68](index=68&type=chunk) - Key product candidates are **apitegromab for SMA** (pivotal **Phase 3 SAPPHIRE trial**) and **SRK-181 for CPI-resistant cancers** (**Phase 1 DRAGON trial**). Apitegromab has received FDA Fast Track, Rare Pediatric Disease, and Orphan Drug designations, and EMA PRIME and Orphan Medicinal Product designations[62](index=62&type=chunk)[63](index=63&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk) - The company incurred a net loss of **$8.0 million** for Q1 2022, with an accumulated deficit of **$384.1 million** as of March 31, 2022, and expects to continue incurring **significant operating losses** due to ongoing R&D and development activities[69](index=69&type=chunk) [Recent Developments](index=28&type=section&id=Recent%20Developments) This section highlights recent strategic changes, including a workforce reduction and its anticipated financial impact - On May 16, 2022, the company announced a business restructuring, including a **25% workforce reduction (39 positions)**, to prioritize clinical stage assets[72](index=72&type=chunk) - This restructuring is expected to incur cash-based costs of **$1.7 million to $2.3 million** for severance benefits and additional non-cash expenses related to equity modifications[72](index=72&type=chunk) [COVID-19 Pandemic](index=28&type=section&id=COVID-19%20Pandemic) This section discusses the adverse impacts of the COVID-19 pandemic on the company's operations, supply chain, and clinical trials - The COVID-19 pandemic has **adversely impacted** the company's workforce, global supply chain, business, preclinical studies, and clinical trials, including disruptions to site access, patient enrollment, and supply procurement[73](index=73&type=chunk) - Clinical trial participants have missed or experienced delays in receiving study drug doses and completing assessments; for example, **four TOPAZ patients missed three apitegromab doses** due to COVID-19-related site access restrictions[73](index=73&type=chunk) - The ultimate extent of the pandemic's impact on business, financial condition, and results of operations remains **highly uncertain**[73](index=73&type=chunk) [Financial Operations Overview](index=28&type=section&id=Financial%20Operations%20Overview) This section provides an overview of the company's revenue sources, operating expenses, and other income/expense components [Revenue](index=28&type=section&id=Revenue) This section details the company's revenue sources, primarily from collaboration agreements, and the impact of the Gilead termination - The company has not generated revenue from product sales; revenue activities have been limited to collaborations, specifically the **Gilead Collaboration Agreement**[75](index=75&type=chunk) - Gilead terminated its option exercise period for all programs under the collaboration on January 6, 2022, leading to the recognition of **$33.2 million in deferred revenue** during Q1 2022[76](index=76&type=chunk)[77](index=77&type=chunk) - **All revenue related to the Gilead Collaboration Agreement has been recognized** as of March 31, 2022[77](index=77&type=chunk) [Operating Expenses](index=30&type=section&id=Operating%20Expenses) This section discusses research and development and general and administrative expenses, including expected trends and impacts of workforce reduction - Research and development (R&D) expenses are expensed as incurred and include employee-related costs, third-party preclinical/clinical activities, manufacturing, consulting, and facility costs[78](index=78&type=chunk)[80](index=80&type=chunk) - R&D costs are expected to **increase for later-stage clinical development** (apitegromab Phase 3, SRK-181 Phase 1) but will be offset by **lower costs for early-stage research** due to portfolio updates and workforce reduction[81](index=81&type=chunk)[82](index=82&type=chunk)[93](index=93&type=chunk) - General and administrative (G&A) expenses, primarily employee-related, are expected to **decline in the second half of the year** due to the recent workforce reduction[85](index=85&type=chunk)[86](index=86&type=chunk)[95](index=95&type=chunk) [Other Income (Expense), Net](index=32&type=section&id=Other%20Income%20(Expense),%20Net) This section explains the components of other income and expense, primarily interest expense from the credit facility - Other income (expense), net, primarily consists of interest expense from the credit facility (including amortization of debt discount and issuance costs), partially offset by interest income earned on cash, cash equivalents, and marketable securities[87](index=87&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of financial results for the current and prior periods, including revenue, expenses, and net loss Summary of Results of Operations (in thousands, except percentages) | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Revenue | $33,193 | $4,708 | $28,485 | 605.0% | | Total operating expenses | $40,126 | $31,915 | $8,211 | 25.7% | | Loss from operations | $(6,933) | $(27,207) | $20,274 | (74.5)% | | Other income (expense), net | $(1,017) | $(464) | $(553) | 119.2% | | Net loss | $(7,950) | $(27,671) | $19,721 | (71.3)% | [Revenue](index=33&type=section&id=Revenue_33) Revenue significantly increased due to the recognition of deferred revenue from the Gilead Collaboration Agreement's termination - Revenue increased by **$28.5 million (605.0%)** to **$33.2 million** for Q1 2022, primarily due to the recognition of **$33.2 million in deferred revenue** from the Gilead Collaboration Agreement's material rights after its termination in January 2022[89](index=89&type=chunk) [Operating Expenses](index=33&type=section&id=Operating%20Expenses_33) Operating expenses increased, driven by higher research and development costs, particularly for apitegromab, and general and administrative expenses Research and Development Expense (in thousands, except percentages) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | External costs by program: | | | | | | Apitegromab | $9,466 | $6,994 | $2,472 | 35.3% | | SRK-181 | $2,240 | $2,442 | $(202) | (8.3)% | | Other early development & unallocated | $1,941 | $973 | $968 | 99.5% | | **Total external costs** | **$13,647** | **$10,409** | **$3,238** | **31.1%** | | Internal costs: | | | | | | Employee compensation & benefits | $11,336 | $7,809 | $3,527 | 45.2% | | Facility and other | $4,383 | $4,331 | $52 | 1.2% | | **Total internal costs** | **$15,719** | **$12,140** | **$3,579** | **29.5%** | | **Total R&D expense** | **$29,366** | **$22,549** | **$6,817** | **30.2%** | - General and administrative expense increased by **$1.4 million (14.9%)** to **$10.8 million** for Q1 2022, primarily due to an increase in non-cash equity-based compensation expense[94](index=94&type=chunk) [Other Income (Expense), Net](index=35&type=section&id=Other%20Income%20(Expense),%20Net_35) Other income (expense), net, shifted to a net expense due to increased interest expense from the debt facility - Other income (expense), net, changed to a net expense of **$(1.017) million** for Q1 2022, primarily due to increased interest expense related to the Loan and Security Agreement after receiving Tranche 2 funding in December 2021[96](index=96&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's ability to meet short-term and long-term obligations, including sources of funds, cash flow trends, and future funding requirements [Sources of Liquidity](index=35&type=section&id=Sources%20of%20Liquidity) This section identifies the primary means by which the company has funded its operations, including equity, collaborations, and debt - The company has funded operations primarily through **equity financings** (private placements, IPO, public offerings, ATM sales), **research collaborations** (Janssen, Gilead), and a **debt facility**[97](index=97&type=chunk) Cash, Cash Equivalents and Marketable Securities (in thousands) | Date | Amount | | :------------------------------------------ | :----- | | March 31, 2022 | $210,211 | | December 31, 2021 | $252,994 | - During Q1 2022, cash, cash equivalents, and marketable securities **decreased by approximately $42.8 million**, mainly due to cash used in operating activities, capital purchases, and debt interest payments[99](index=99&type=chunk) [Cash Flows](index=37&type=section&id=Cash%20Flows) This section provides a detailed breakdown of cash flows from operating, investing, and financing activities Cash Flow Summary (in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(42,565) | $(26,544) | | Net cash (used in) provided by investing activities | $(70,576) | $22,557 | | Net cash provided by financing activities | $481 | $2,737 | | **Net decrease in cash, cash equivalents and restricted cash** | **$(112,660)** | **$(1,250)** | - Net cash used in operating activities increased to **$42.6 million** in Q1 2022, primarily due to a **$33.2 million change in deferred revenue** related to the Gilead collaboration[106](index=106&type=chunk) - Net cash used in investing activities was **$70.6 million** in Q1 2022 (compared to **$22.6 million provided in Q1 2021**), mainly due to transactions involving marketable securities[110](index=110&type=chunk) [Funding Requirements](index=39&type=section&id=Funding%20Requirements) This section outlines future capital needs, expected funding timeline, and potential financing methods and their implications - Existing cash, cash equivalents, and marketable securities are expected to fund operating expenses and capital expenditure requirements **into Q4 2023**, but additional capital will be required to complete clinical development for current programs[113](index=113&type=chunk) - Future capital requirements are **highly uncertain** and depend on factors such as clinical trial costs, regulatory approvals, manufacturing, and intellectual property defense[113](index=113&type=chunk)[122](index=122&type=chunk) - The company expects to finance future cash needs through **equity offerings** (potentially dilutive), **debt financings** (potentially restrictive covenants), or **collaborations** (potentially relinquishing valuable rights)[117](index=117&type=chunk)[118](index=118&type=chunk) [Critical Accounting Estimates](index=41&type=section&id=Critical%20Accounting%20Estimates) This section discusses key accounting estimates and judgments made by management in preparing the financial statements - The preparation of financial statements requires management to make judgments and estimates in accordance with GAAP, based on historical experience and reasonable assumptions[119](index=119&type=chunk) - There have been **no material changes** to the critical accounting estimates from those described in the company's Annual Report on Form 10-K for the year ended December 31, 2021[120](index=120&type=chunk) [Off-Balance Sheet Arrangements](index=41&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements as defined by SEC rules - The company did not have any off-balance sheet arrangements during the periods presented and does not currently have any, as defined under applicable SEC rules[123](index=123&type=chunk) [Recent Accounting Pronouncements](index=43&type=section&id=Recent%20Accounting%20Pronouncements) This section states that recently issued accounting standards are not expected to materially impact the company's financial statements - The company has reviewed all recently issued accounting standards and determined that they will **not have a material impact** on its financial statements or operations[124](index=124&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Scholar Rock Holding Corporation is not required to provide quantitative and qualitative disclosures about market risk - The company is a **smaller reporting company** as defined by Rule 12b-2 of the Securities Exchange Act of 1934[125](index=125&type=chunk) - As such, it is **not required to provide quantitative and qualitative disclosures about market risk**[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the interim CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2022, and concluded they were effective at a reasonable assurance level. There were no material changes in internal control over financial reporting during the quarter - Management, with the participation of the interim CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of **March 31, 2022**[127](index=127&type=chunk) - The disclosure controls and procedures were concluded to be **effective at the reasonable assurance level**[127](index=127&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three months ended March 31, 2022[128](index=128&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and recent corporate events [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings or claims that would reasonably be expected to have a material adverse effect on its business - The company is **not subject to any material legal proceedings or claims** that would individually or in the aggregate have a material adverse effect on its business[130](index=130&type=chunk) - Litigation, regardless of outcome, can **adversely impact the business** due to defense and settlement costs and diversion of management resources[130](index=130&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks across product development, regulatory approval, manufacturing, business operations, intellectual property, and financial condition [Summary of the Material Risks Associated with Our Business](index=45&type=section&id=Summary%20of%20the%20Material%20Risks%20Associated%20with%20Our%20Business) This section provides a high-level overview of the most significant risks impacting the company's business operations and financial stability - **Product development and regulatory approval** involve a lengthy, expensive, and uncertain process, with potential for delays, increased costs, and failure to commercialize product candidates[133](index=133&type=chunk) - The ongoing **COVID-19 pandemic** has materially and adversely affected business operations, preclinical studies, and clinical trials, including data and activities[133](index=133&type=chunk) - **Reliance on third parties** for manufacturing and supply, as well as for conducting clinical trials, poses risks of limitations, interruptions, and non-compliance[133](index=133&type=chunk)[136](index=136&type=chunk) - **Business operations** face risks from restructuring, challenges in organizational growth, difficulty retaining key personnel, and compliance failures with laws and regulations[140](index=140&type=chunk) - **Intellectual property protection** is difficult and costly, with risks related to maintaining proprietary rights, dependence on licensed IP, and potential infringement claims[138](index=138&type=chunk)[140](index=140&type=chunk) - The company has incurred **net losses** since inception, anticipates future losses, and will require **additional capital** to fund operations and complete product development[141](index=141&type=chunk)[144](index=144&type=chunk) [Risks Related to Product Development and Regulatory Approval](index=48&type=section&id=Risks%20Related%20to%20Product%20Development%20and%20Regulatory%20Approval) This section details risks associated with the lengthy, uncertain, and costly process of developing and obtaining regulatory approval for product candidates - **Product development is a lengthy, expensive, and uncertain process**, with preclinical and early-stage clinical trial results not always predictive of later-stage success[142](index=142&type=chunk)[161](index=161&type=chunk)[163](index=163&type=chunk) - Clinical trials face risks of delays, unforeseen events, difficulty in patient enrollment (especially for rare diseases like SMA), and potential for **significant adverse events or undesirable side effects** that could hinder regulatory approval or market acceptance[144](index=144&type=chunk)[165](index=165&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) - The **COVID-19 pandemic has caused disruptions** to clinical trials, including site access restrictions, enrollment delays, and supply chain issues, potentially impacting data readouts and development timelines[151](index=151&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[158](index=158&type=chunk) - Regulatory authorities (FDA, EMA) may disagree with development plans, and special designations like Orphan Drug, Rare Pediatric Disease, Fast Track, or PRIME **do not guarantee faster approval**, market exclusivity, or priority review vouchers[188](index=188&type=chunk)[193](index=193&type=chunk)[199](index=199&type=chunk)[205](index=205&type=chunk) - Even if regulatory approval is received, products will be subject to ongoing regulatory obligations and review, and may **fail to achieve market acceptance** by physicians, patients, and payors, particularly if alternative treatments are deemed sufficient or reimbursement is inadequate[215](index=215&type=chunk)[221](index=221&type=chunk) [Risks Related to Manufacturing and Supply](index=78&type=section&id=Risks%20Related%20to%20Manufacturing%20and%20Supply) This section outlines risks stemming from reliance on third-party manufacturers for all product supplies, including potential limitations, interruptions, and quality issues - The company relies **entirely on third-party contract manufacturers** for all preclinical, clinical, and future commercial product supplies, including drug substance, vialing, labeling, and packaging[229](index=229&type=chunk) - This reliance creates risks of **supply limitations, interruptions** (exacerbated by COVID-19 and potential diversion to vaccine production), and quality issues, especially given the use of a **single source supplier** for drug substance[229](index=229&type=chunk) - Any need to change manufacturers would be **costly, time-consuming**, and could delay development and commercialization due to the need for facility and process validation and potential difficulties in transferring unique technical skills[230](index=230&type=chunk) - **Manufacturing scale-up** for later-stage clinical trials and commercial production presents challenges in terms of timeliness, cost-effectiveness, and quality control[235](index=235&type=chunk) - Reliance on antibody discovery vendors may lead to substantial milestone payments and royalties under license agreements, and **failure to meet obligations could result in the loss of rights** to discovered antibodies[236](index=236&type=chunk) [Risks Related to Our Business and Operations](index=80&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Operations) This section covers operational risks such as workforce reduction impacts, growth management, personnel retention, compliance, cybersecurity, and external disruptions - The May 2022 **workforce reduction may not achieve anticipated savings**, could incur higher-than-expected costs, and disrupt business operations, potentially affecting employee morale and retention[238](index=238&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) - Challenges exist in managing organizational growth, attracting and retaining qualified managerial and scientific personnel, and the **loss of key executives could impair product development**[242](index=242&type=chunk)[245](index=245&type=chunk)[249](index=249&type=chunk) - The company faces risks from **cybersecurity breaches, employee misconduct** (including non-compliance with regulatory standards), and evolving healthcare legislative and regulatory reforms (e.g., anti-kickback, fraud and abuse, data protection laws like GDPR), which could lead to penalties, litigation, and reputational harm[250](index=250&type=chunk)[251](index=251&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[260](index=260&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk) - Operational disruptions from **natural disasters, disease outbreaks** (like COVID-19), or geopolitical events (e.g., Russia-Ukraine conflict) could severely impact facilities, clinical trials, and supply chains[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk) - The commercial success of approved products depends on **adequate coverage and reimbursement** from third-party payors, which is uncertain and subject to governmental controls and cost-containment initiatives, particularly in the EU[285](index=285&type=chunk)[287](index=287&type=chunk)[289](index=289&type=chunk)[294](index=294&type=chunk) - Future collaborations carry risks, including collaborators' discretion over efforts, potential competition, and **termination of agreements**, which could lead to loss of funding or rights[299](index=299&type=chunk)[300](index=300&type=chunk)[303](index=303&type=chunk)[305](index=305&type=chunk) [Risks Related to Our Intellectual Property](index=105&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section addresses challenges in protecting intellectual property, reliance on licensed IP, impacts of patent law changes, and risks of infringement claims - **Protecting intellectual property** (patents, trademarks, trade secrets) is difficult and costly, with risks that patents may not be broad enough, challenged, invalidated, or circumvented by competitors[307](index=307&type=chunk)[310](index=310&type=chunk)[312](index=312&type=chunk)[316](index=316&type=chunk) - The company depends on intellectual property licensed from third parties; **failure to comply with license obligations or termination of licenses could result in the loss of significant rights**[319](index=319&type=chunk)[321](index=321&type=chunk) - **Changes in patent law** (e.g., America Invents Act, Supreme Court rulings) in the U.S. and other jurisdictions could diminish patent value and weaken the ability to obtain or enforce patents[328](index=328&type=chunk)[329](index=329&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) - Third-party claims of **intellectual property infringement** may prevent or delay product development and commercialization, leading to substantial litigation costs, damages, or the need for licenses on unfavorable terms[333](index=333&type=chunk)[334](index=334&type=chunk)[339](index=339&type=chunk) - **Inability to protect trade secrets** or prevent their misappropriation could harm the business and competitive position, as enforcement is difficult and costly[355](index=355&type=chunk)[356](index=356&type=chunk) - **Limited foreign intellectual property rights** mean the company may not be able to protect its inventions globally, and foreign legal systems may not offer the same level of protection as the U.S[350](index=350&type=chunk)[351](index=351&type=chunk) [Risks Related to Our Financial Condition and Capital Requirements](index=125&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Capital%20Requirements) This section highlights the company's history of net losses, ongoing capital needs, potential financing impacts, and risks from tax law changes - The company has incurred **net losses in every year since its inception**, with an accumulated deficit of **$384.1 million** as of March 31, 2022, and anticipates continued significant losses[361](index=361&type=chunk)[362](index=362&type=chunk) - **Additional capital will be required** to fund operations and complete clinical development for current programs, with existing cash, cash equivalents, and marketable securities projected to fund operations only **into Q4 2023**[366](index=366&type=chunk) - Future financing through **equity offerings may dilute stockholder ownership**, debt financings may involve restrictive covenants, and collaborations may require relinquishing valuable rights[369](index=369&type=chunk) - **Changes in tax law** and limitations on the use of net operating loss (NOL) carryforwards and tax credit carryforwards (e.g., due to Section 382 ownership changes) could adversely affect financial condition[370](index=370&type=chunk)[371](index=371&type=chunk)[373](index=373&type=chunk) [Risks Related to Our Common Stock](index=131&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) This section discusses factors affecting common stock, including price volatility, significant insider ownership, reduced reporting requirements, and anti-takeover provisions - The company's **stock price is volatile** and subject to wide fluctuations, often unrelated to operating performance, and the company does not intend to pay dividends, limiting stockholder returns to stock appreciation[376](index=376&type=chunk)[377](index=377&type=chunk)[378](index=378&type=chunk) - **Significant ownership by board members, management, and affiliates (approximately 17.6%)** allows them to exert substantial control over matters requiring stockholder approval[379](index=379&type=chunk) - As an '**emerging growth company**' and '**smaller reporting company**,' the company benefits from reduced reporting requirements, which may make its common stock less attractive to some investors and increase stock price volatility[382](index=382&type=chunk)[383](index=383&type=chunk)[385](index=385&type=chunk) - Operating as a public company incurs **significant legal, accounting, and compliance costs**, and management has broad discretion in the use of existing cash, cash equivalents, and marketable securities[386](index=386&type=chunk)[392](index=392&type=chunk) - **Anti-takeover provisions** in charter documents and Delaware law could delay or prevent a change of control, limiting the market price of common stock and potentially frustrating stockholder attempts to replace management[393](index=393&type=chunk)[396](index=396&type=chunk) - **Exclusive forum provisions** in the bylaws require certain disputes to be resolved in specific judicial forums, potentially limiting stockholders' ability to choose a favorable forum and increasing litigation costs[399](index=399&type=chunk)[401](index=401&type=chunk)[402](index=402&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=139&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities and no issuer purchases of equity securities during the period - **No unregistered sales of equity securities** were reported[403](index=403&type=chunk) - **No issuer purchases of equity securities** were reported[404](index=404&type=chunk) [Item 3. Defaults Upon Senior Securities](index=139&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - **No defaults upon senior securities** were reported[405](index=405&type=chunk) [Item 4. Mine Safety Disclosures](index=139&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - **No mine safety disclosures** were reported[405](index=405&type=chunk) [Item 5. Other Information](index=139&type=section&id=Item%205.%20Other%20Information) This section details the company's recent restructuring plan, announced May 16, 2022, which includes a 25% workforce reduction (39 positions) to prioritize clinical stage assets. This will incur estimated cash-based severance costs of $1.7 million to $2.3 million and non-cash equity modification expenses. Additionally, the Chief Medical Officer resigned, effective June 30, 2022 - On May 16, 2022, the company announced a business restructuring involving a **25% reduction in workforce (39 positions)** to prioritize clinical stage assets[406](index=406&type=chunk) - Estimated cash-based costs for severance benefits are **$1.7 million to $2.3 million**, with additional non-cash expenses related to equity modifications[406](index=406&type=chunk)[408](index=408&type=chunk) - The Chief Medical Officer, Yung Chyung, resigned effective **June 30, 2022**[409](index=409&type=chunk) [Item 6. Exhibits](index=142&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate documents, specimen stock certificates, debt agreements, and certifications, with specific reference to the Letter Agreement with Gilead Sciences, Inc. and certifications of the Principal Executive and Financial Officers - Exhibits include corporate governance documents (Certificate of Incorporation, By-laws), investor agreements (Investors' Rights Agreement, Warrant to Purchase Stock), and key operational agreements (**Letter Agreement with Gilead Sciences, Inc. dated January 6, 2022**)[411](index=411&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer are filed/furnished as exhibits, along with XBRL instance and taxonomy documents[411](index=411&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number: 001-38501 SCHOLAR ROCK HOLDING CORPORATION (Exact name of Registrant as specified in its charter) Delaware 82-3750435 ...

Deep Insights Advancing Impactful Medicines 40th Annual J.P. Morgan Healthcare Conference January 10-13, 2022 ScholarRock. | --- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _ TO _ COMMISSION FILE NUMBER 001-38501 ______________________________________________ SCHOLAR ROCK HOLDING CORPORATION (Exact name of registrant a ...

Deep Insights, Impactful Medicines August 2021 ScholarRock. Disclaimers Various statements in this presentation concerning the future expectations, plans and prospects of Scholar Rock, Inc. ("Scholar Rock"), including without limitation, Scholar Rock's expectations regarding its strategy, its product candidate selection and development timing, including timing for the initiation of and reporting results from its clinical trials for its product candidates, its disease indication selection and timing for such ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, and cash flows, reflecting increased net loss and cash usage driven by higher R&D expenses [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2021, the company's total assets were $332.1 million, a decrease from $388.3 million at year-end 2020, primarily due to a reduction in marketable securities Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $206,919 | $160,358 | | Marketable securities | $75,298 | $180,673 | | Total current assets | $290,366 | $344,404 | | **Total assets** | **$332,051** | **$388,305** | | **Liabilities & Equity** | | | | Total current liabilities | $67,022 | $42,564 | | Total liabilities | $115,395 | $127,535 | | Total stockholders' equity | $216,656 | $260,770 | | **Total liabilities and stockholders' equity** | **$332,051** | **$388,305** | [Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three and six months ended June 30, 2021, revenues were $4.6 million and $9.3 million, respectively, with net losses increasing to $30.7 million and $58.4 million due to higher R&D and G&A expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | 6 Months 2021 | 6 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $4,595 | $3,900 | $9,303 | $8,930 | | Research and development | $25,603 | $16,997 | $48,152 | $33,899 | | General and administrative | $9,265 | $6,365 | $18,631 | $12,187 | | Loss from operations | $(30,273) | $(19,462) | $(57,480) | $(37,156) | | **Net loss** | **$(30,707)** | **$(19,281)** | **$(58,378)** | **$(36,351)** | | Net loss per share | $(0.84) | $(0.65) | $(1.60) | $(1.23) | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash used in operating activities significantly increased to $58.4 million, while investing activities provided $101.6 million, resulting in a $46.6 million increase in cash to $209.4 million Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(58,357) | $(17,191) | | Net cash provided by investing activities | $101,574 | $95,017 | | Net cash provided by financing activities | $3,344 | $994 | | **Net increase in cash, cash equivalents and restricted cash** | **$46,561** | **$78,820** | | **Cash, cash equivalents and restricted cash, end of period** | **$209,417** | **$117,626** | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's business, accounting policies, and financial statement line items, including product candidates, collaboration terms, and debt facility details - The company's lead product candidate, apitegromab, is being developed for Spinal Muscular Atrophy (SMA) and is anticipated to start a **Phase 3 trial** by year-end 2021, while SRK-181 is in a **Phase 1 trial** for cancers resistant to checkpoint inhibitors[21](index=21&type=chunk) - Under the Gilead collaboration, the company recognized **$4.6 million** and **$9.3 million** in revenue for the three and six months ended June 30, 2021, respectively, with **$42.7 million** remaining in deferred revenue as of June 30, 2021[54](index=54&type=chunk) - In October 2020, the company entered into a **$50.0 million** loan agreement, with the first **$25.0 million** tranche funded and a second **$25.0 million** tranche available through December 31, 2021, contingent on clinical trial milestones[48](index=48&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses business overview, clinical developments, and COVID-19 impact, detailing increased operating expenses, particularly R&D, and the need for additional capital despite current liquidity into 2023 [Overview and COVID-19 Impact](index=22&type=section&id=Overview%20and%20COVID-19%20Impact) The company, a biopharmaceutical firm, is advancing apitegromab (SMA) and SRK-181 (cancer) candidates, while navigating COVID-19 related disruptions to clinical trials and supply chains - **Positive 12-month top-line data** from the TOPAZ **Phase 2 trial** for apitegromab in SMA was announced in April 2021, with a pivotal **Phase 3 trial** expected to start by the end of 2021[66](index=66&type=chunk)[71](index=71&type=chunk) - The DRAGON **Phase 1 trial** for SRK-181 is progressing, with plans to advance to the dose expansion portion (Part B) in mid-2021 and initial data from Part A expected by the end of 2021[73](index=73&type=chunk) - The **COVID-19 pandemic** has caused disruptions, including four patients in the TOPAZ trial missing three doses each due to site access restrictions and slower enrollment in the DRAGON trial[80](index=80&type=chunk)[174](index=174&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Operating expenses significantly increased, driven by higher R&D costs for apitegromab manufacturing and SRK-181 clinical trials, alongside growth in general and administrative expenses Comparison of Results for the Six Months Ended June 30 (in thousands) | Item | 2021 | 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $9,303 | $8,930 | $373 | 4.2% | | Research and development | $48,152 | $33,899 | $14,253 | 42.0% | | General and administrative | $18,631 | $12,187 | $6,444 | 52.9% | | **Net loss** | **$(58,378)** | **$(36,351)** | **$(22,027)** | **60.6%** | - The **$14.3 million** increase in R&D expense for the first six months of 2021 was driven by a **$7.9 million** increase in apitegromab costs (mainly manufacturing) and a **$9.4 million** increase in internal costs (personnel and new facility), partially offset by a **$3.4 million** decrease in SRK-181 costs[108](index=108&type=chunk)[109](index=109&type=chunk)[113](index=113&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2021, the company had $282.2 million in cash, cash equivalents, and marketable securities, sufficient to fund operations into 2023, but additional capital will be required to complete clinical development - The company's cash, cash equivalents, and marketable securities totaled **$282.2 million** as of June 30, 2021[117](index=117&type=chunk) - Existing cash is expected to fund operating expenses and capital expenditure requirements into **2023**[130](index=130&type=chunk) - Key funding sources include a November 2020 follow-on offering that raised approximately **$215.9 million** in net proceeds and a **$50.0 million** debt facility, of which **$25.0 million** has been drawn[118](index=118&type=chunk)[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is a smaller reporting company and is not required to provide the information for this item - As a **smaller reporting company**, Scholar Rock is not required to provide quantitative and qualitative disclosures about market risk[141](index=141&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting during the period - Management concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2021[143](index=143&type=chunk) - No changes in internal control over financial reporting occurred during the six months ended June 30, 2021, that materially affected, or are reasonably likely to materially affect, internal controls[146](index=146&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it is not party to any material legal proceedings that would be reasonably expected to have a material adverse effect on its business - As of the date of the report, the company is not party to any claim or litigation expected to have a **material adverse effect** on the business[147](index=147&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks and uncertainties across product development, manufacturing, operations, intellectual property, financial condition, and common stock - The company identifies several **material risks**, including the **lengthy and expensive process** of product development with an **uncertain outcome**, potential adverse effects from the **COVID-19 pandemic**, **reliance on third parties** for clinical trials and manufacturing, and the **need for additional capital**[150](index=150&type=chunk)[152](index=152&type=chunk)[155](index=155&type=chunk) [Risks Related to Product Development and Regulatory Approval](index=53&type=section&id=Risks%20Related%20to%20Product%20Development%20and%20Regulatory%20Approval) This subsection outlines the significant uncertainties in drug development, including high costs, long timelines, unpredictable regulatory processes, and potential for adverse events or enrollment difficulties - Product development is a **lengthy, expensive process** with an **uncertain outcome**, and the company may experience delays or be unable to complete the development and commercialization of its product candidates[160](index=160&type=chunk) - The **COVID-19 pandemic** has impacted and may continue to impact clinical trials through enrollment delays, site access restrictions, and supply chain disruptions[170](index=170&type=chunk) - The results of preclinical studies and early-stage clinical trials may not predict future results, and interim data may change as more patient data becomes available[179](index=179&type=chunk)[180](index=180&type=chunk) [Risks Related to Manufacturing and Supply](index=79&type=section&id=Risks%20Related%20to%20Manufacturing%20and%20Supply) The company's dependence on third-party contract manufacturers for all preclinical and clinical product supplies creates risks of supply interruption, quality control issues, and scaling challenges - The company relies on **third-party manufacturers** for all clinical trial supplies and does not own its own manufacturing facilities, creating risks of supply interruption or quality issues[243](index=243&type=chunk) - The company relies on a **single source supplier** for the drug substance for both apitegromab and SRK-181, which could create significant disruption if this relationship is impacted[243](index=243&type=chunk) [Risks Related to Our Business and Operations](index=83&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Operations) This section covers operational risks, including managing organizational growth, retaining key personnel, protecting against cybersecurity threats, ensuring compliance with complex healthcare regulations, and dependence on the Gilead collaboration - The company needs to grow its organization and may experience difficulties managing this growth, including attracting and retaining **qualified personnel**[255](index=255&type=chunk) - Failure to maintain the **Gilead Collaboration Agreement** or failure by Gilead to perform its obligations could negatively impact the business[332](index=332&type=chunk) - The business is subject to **complex healthcare laws and regulations**, including anti-kickback statutes and data privacy laws, non-compliance with which could result in **significant penalties**[279](index=279&type=chunk)[289](index=289&type=chunk) [Risks Related to Intellectual Property](index=117&type=section&id=Risks%20Related%20to%20Intellectual%20Property) The company's success is highly dependent on its ability to obtain and maintain patent, trademark, and trade secret protection, facing risks from application failures, validity challenges, third-party infringement claims, and global protection difficulties - The company's success depends on its ability to obtain and maintain **patent and trade secret protection**, which is a difficult and costly process[348](index=348&type=chunk) - The company depends on **intellectual property licensed from third parties**, and failure to comply with license obligations could result in the loss of significant rights[358](index=358&type=chunk) - Third-party claims of **intellectual property infringement** could prevent or delay product development and lead to costly litigation[374](index=374&type=chunk) [Risks Related to Our Financial Condition and Capital Requirements](index=135&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Capital%20Requirements) This subsection details the company's history of net losses and the expectation that losses will continue, highlighting the primary risk of needing to raise additional capital to fund operations and complete product development - The company has incurred **net losses** every year since inception and anticipates this will continue as it advances its R&D programs[405](index=405&type=chunk) - The company will require **additional capital** to complete the development and commercialization of its product candidates, and failure to obtain it could force delays or discontinuation of programs[410](index=410&type=chunk) - The ability to use net operating loss carryforwards of **$168.4 million** (federal) and **$170.1 million** (state) may be limited by ownership changes under Section 382 of the tax code[415](index=415&type=chunk) [Risks Related to Our Common Stock](index=141&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) Risks related to the company's common stock include price volatility, no dividend intention, significant insider ownership concentration, and reduced reporting requirements as an "emerging growth company" and "smaller reporting company" - The trading price of the company's common stock is subject to **high volatility**[419](index=419&type=chunk) - As of June 30, 2021, executive officers, directors, and their affiliates beneficially hold approximately **17.7%** of the outstanding voting stock, allowing them to exert **significant control**[422](index=422&type=chunk) - The company is an **"emerging growth company"** and a **"smaller reporting company,"** which allows for reduced public company reporting requirements[426](index=426&type=chunk)[429](index=429&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=150&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates that there were no unregistered sales of equity securities during the reporting period - The company reports **no unregistered sales** of equity securities for the period[446](index=446&type=chunk) [Item 5. Other Information](index=150&type=section&id=Item%205.%20Other%20Information) The company reports that there is no other information to disclose for this item - No information was reported under this item[449](index=449&type=chunk) [Item 6. Exhibits](index=151&type=section&id=Item%206.%20Exhibits) This section provides an index of the exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and officer certifications

Apitegromab Positioned to be the Potential Next Transformative Therapy for Patients Suffering with SMA KOL Event and Panel Discussion June 15, 2021 & ScholarRock. Disclaimers Various statements in this presentation concerning the future expectations, plans and prospects of Scholar Rock, Inc. ("Scholar Rock"), including without limitation, Scholar Rock's expectations regarding its strategy, its product candidate selection and development timing, including timing for the initiation of and reporting results fr ...