[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) The Annual Report contains forward-looking statements covered by safe harbor provisions, outlining risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements covered by safe harbor provisions, identifiable by terms like 'may', 'will', 'expects', 'intends', 'plans', 'anticipates', 'believes', 'estimates', 'predicts', 'potential', 'continue'[6](index=6&type=chunk) - Key risks and uncertainties include the success, cost, and timing of clinical trials for apitegromab and SRK-181, ability to obtain funding, impact of global economic and political developments (e.g., inflation, Ukraine conflict, COVID-19), regulatory approval processes, ability to retain personnel, intellectual property protection, manufacturing capabilities, market size, and cash reserve utilization[7](index=7&type=chunk)[10](index=10&type=chunk) - Investors should not place undue reliance on forward-looking statements and should refer to the 'Risk Factors' section for a comprehensive discussion of potential adverse effects[9](index=9&type=chunk) [PART I](index=6&type=section&id=PART%20I) [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Scholar Rock is a biopharmaceutical company developing innovative medicines by targeting precursor forms of protein growth factors for serious diseases - Scholar Rock is a biopharmaceutical company specializing in the discovery and development of innovative medicines by targeting the precursor (latent) forms of protein growth factors, particularly the TGFβ superfamily[12](index=12&type=chunk)[18](index=18&type=chunk) - The company's proprietary platform aims to avoid historical dose-limiting safety challenges by locally and selectively inhibiting growth factor activation in the disease microenvironment[12](index=12&type=chunk)[20](index=20&type=chunk) - Key product candidates include apitegromab for spinal muscular atrophy (SMA) and SRK-181 for cancers resistant to checkpoint inhibitor therapies, alongside preclinical programs for fibrosis and iron-restricted anemia[13](index=13&type=chunk)[14](index=14&type=chunk) [Overview](index=6&type=section&id=Overview) Scholar Rock develops innovative medicines for serious diseases by targeting protein growth factors, with lead candidates apitegromab for SMA and SRK-181 for cancer - Scholar Rock is a biopharmaceutical company focused on discovering and developing innovative medicines for serious diseases by targeting protein growth factors, leveraging a novel understanding of TGFβ superfamily biology[12](index=12&type=chunk) - Their proprietary platform develops monoclonal antibodies that locally and selectively target latent forms of growth factors, aiming to avoid systemic side effects[12](index=12&type=chunk) - Current pipeline includes apitegromab for SMA (Phase 3), SRK-181 for checkpoint inhibitor-resistant cancers (Phase 1), and preclinical programs for fibrotic diseases and iron-restricted anemia[13](index=13&type=chunk)[14](index=14&type=chunk) [Our Approach and Proprietary Platform](index=8&type=section&id=Our%20Approach%20and%20Proprietary%20Platform) The company's proprietary platform targets latent growth factor precursors, aiming for heightened specificity and localized action, protected by patents into the 2030s - The proprietary platform targets latent precursor forms of growth factors, inhibiting their activation within the disease microenvironment, rather than targeting activated forms systemically[18](index=18&type=chunk)[26](index=26&type=chunk) - This approach offers advantages such as heightened selectivity among structurally related growth factors (e.g., myostatin vs GDF11), minimizing off-target effects and preserving normal physiological processes[27](index=27&type=chunk) - The platform is rooted in structural biology insights, protein expression, assay development, and monoclonal antibody discovery capabilities, protected by two patent families with expirations projected into the 2030s[26](index=26&type=chunk) [Our Expertise](index=14&type=section&id=Our%20Expertise) Scholar Rock has an experienced management team, board, and scientific founders with extensive industry expertise in therapeutic development - The company has an experienced management team, board of directors, scientific founders (Drs Timothy A Springer and Leonard I Zon), and advisory board[29](index=29&type=chunk) - Team members have deep experience in discovering, developing, and commercializing therapeutics from companies like Acceleron Pharma, Alnylam Pharmaceuticals, Novartis Pharmaceuticals, and others[29](index=29&type=chunk) [Our Strategy](index=14&type=section&id=Our%20Strategy) The strategy focuses on advancing apitegromab and SRK-181, expanding the pipeline with new targets, and seeking collaborations to maximize platform value - Advance apitegromab through its pivotal Phase 3 SAPPHIRE trial for nonambulatory Type 2 and Type 3 SMA, with top-line data expected in **2024** and potential commercial launch in **2025**[13](index=13&type=chunk)[30](index=30&type=chunk) - Identify next indications for apitegromab, exploring its potential across SMA types and other myostatin-related muscle disorders, including metabolic physiology[30](index=30&type=chunk) - Advance SRK-181, a selective TGFβ1 inhibitor, through clinical proof-of-concept in Phase 1 DRAGON trial for checkpoint inhibitor-resistant solid tumors, and explore additional oncology indications[15](index=15&type=chunk)[30](index=30&type=chunk) - Expand the pipeline by leveraging the proprietary platform to target additional growth factors (e.g., BMP6) and other protein classes, investing in antibody display library technologies[31](index=31&type=chunk)[32](index=32&type=chunk) - Seek strategic collaborations to maximize platform and pipeline value, maintaining in-house development for key programs while partnering for other disease areas[32](index=32&type=chunk) [Our Pipeline](index=15&type=section&id=Our%20Pipeline) Scholar Rock's pipeline targets latent growth factors for neuromuscular disorders, cancer, fibrosis, and anemia, retaining worldwide rights to its platform and candidates - Scholar Rock's pipeline focuses on selectively inhibiting latent growth factors for neuromuscular disorders, cancer, fibrosis, and iron-restricted anemia[33](index=33&type=chunk) - The proprietary platform encompasses expertise in expressing latent protein growth factor complexes, identifying selective antibodies using proprietary libraries, and developing assays to modulate specific latent growth factors[33](index=33&type=chunk) - The company retains worldwide rights to its proprietary platform and all product candidates[33](index=33&type=chunk) [Our Product Candidates and Additional Programs](index=16&type=section&id=Our%20Product%20Candidates%20and%20Additional%20Programs) The pipeline includes apitegromab (SMA, Phase 3) and SRK-181 (cancer, Phase 1), plus preclinical programs for fibrosis and iron-restricted anemia - Apitegromab is a highly selective inhibitor of latent myostatin activation, developed as a potential first muscle-targeted therapy for SMA[34](index=34&type=chunk)[36](index=36&type=chunk) - Currently in pivotal Phase 3 SAPPHIRE clinical trial for nonambulatory Type 2 and Type 3 SMA, with enrollment expected to complete in **2023** and top-line data in **2024**, targeting a commercial launch in **2025** if approved[13](index=13&type=chunk)[35](index=35&type=chunk) - Positive 24-month efficacy and safety extension data from Phase 2 TOPAZ trial showed sustained and continued improvement in HFMSE and RULM scores for nonambulatory Type 2 and 3 SMA patients receiving SMN therapy[68](index=68&type=chunk)[71](index=71&type=chunk) - Apitegromab has received Fast Track, Rare Pediatric Disease, and Orphan Drug designations from the FDA, and PRIME and Orphan Medicinal Product designations from the EMA[14](index=14&type=chunk)[56](index=56&type=chunk) [Apitegromab — Our Inhibitor of Latent Myostatin Activation for SMA](index=16&type=section&id=Apitegromab%20%E2%80%94%20Our%20Inhibitor%20of%20Latent%20Myostatin%20Activation%20for%20SMA) Apitegromab, a selective latent myostatin inhibitor, is in Phase 3 for SMA, showing sustained improvements in Phase 2, and holds multiple expedited regulatory designations [Background on SMA](index=16&type=section&id=Background%20on%20SMA) SMA is a rare, often fatal genetic disorder causing motor neuron loss and muscle weakness due to insufficient SMN protein - SMA is a rare, often fatal, genetic disorder characterized by loss of motor neurons, muscle atrophy, and progressive muscle weakness[37](index=37&type=chunk) - The pathology is caused by insufficient production of the 'survival of motor neuron' (SMN) protein, encoded by SMN1 (primary functional) and SMN2 (produces **10-20%** functional protein) genes[37](index=37&type=chunk)[42](index=42&type=chunk) - Disease severity correlates with the number of SMN2 gene copies; fewer copies lead to earlier and more severe SMA[42](index=42&type=chunk) [SMA Natural History and Epidemiology](index=18&type=section&id=SMA%20Natural%20History%20and%20Epidemiology) SMA is the most common monogenic cause of infant death, affecting **30,000-35,000 patients** in the U.S. and Europe, with Type 2 and 3 as initial focus - SMA is the most common monogenic cause of death in infants, affecting an estimated **30,000 to 35,000 patients** in the U.S. and Europe[39](index=39&type=chunk) - SMA is categorized into four types (1-4), with Type 2 and Type 3 representing the majority of current prevalent patients in the U.S. and Europe[39](index=39&type=chunk) - Nonambulatory Type 2 and Type 3 SMA patients are the initial focus of apitegromab's development program[39](index=39&type=chunk) SMA Disease Types and Characteristics | Type | Severity | Onset | Key Characteristics | | :--- | :--- | :--- | :--- | | **Type 1** | Most severe | At or shortly after birth | Respiratory compromise, often requires mechanical ventilation, unable to sit without support, motor neuron and muscle loss before birth | | **Type 2** | Less severe than Type 1 | Early childhood | Profound motor function deficits, may sit independently but typically unable to walk without assistance | | **Type 3** | Usually in childhood | Childhood | Develops ability to walk unaided, but many lose this ability over time; substantial motor functional impairment (HFMSE, Six Minute Walk Test) | | **Type 4** | Mildest | 20-30 years of age | Mild to moderate muscle weakness, increasing disabilities, ambulatory, normal life expectancy | [Unmet Medical Need in SMA](index=18&type=section&id=Unmet%20Medical%20Need%20in%20SMA) A significant unmet need exists for improving motor function in SMA patients, with muscle-targeted therapies like apitegromab complementing SMN treatments - Despite progress with SMN therapies (antisense oligonucleotides, small molecules, gene therapy), a high unmet medical need remains to improve motor function in SMA[40](index=40&type=chunk)[41](index=41&type=chunk) - SMN therapies primarily address SMN deficiency to modify disease course, but many patients miss the early intervention window and suffer severe functional impairment[41](index=41&type=chunk) - Apitegromab is being developed as a potential first muscle-targeted therapy to complement SMN therapies in Type 2 and 3 SMA, aiming for absolute increases in functional performance[42](index=42&type=chunk) [Myostatin in SMA and Challenges with Traditional Approaches](index=20&type=section&id=Myostatin%20in%20SMA%20and%20Challenges%20with%20Traditional%20Approaches) Myostatin negatively regulates muscle mass; traditional inhibition approaches faced specificity issues and off-target effects due to structural similarities with other TGFβ members - Myostatin (GDF8) is a catabolic agent produced by skeletal muscle cells, acting as a negative regulator of muscle mass, with a preferential effect on fast-twitch muscle fibers[46](index=46&type=chunk)[47](index=47&type=chunk) - Traditional approaches to inhibit myostatin (targeting mature myostatin or its receptor ActRIIb) have significant limitations due to lack of pathway and target selectivity[48](index=48&type=chunk)[49](index=49&type=chunk) - Myostatin shares **90% structural similarity** with GDF11, and ActRIIb is a receptor for multiple related growth factors, leading to off-target effects like bleeding and suppression of reproductive hormones in clinical trials[49](index=49&type=chunk)[50](index=50&type=chunk) [Our Solution](index=20&type=section&id=Our%20Solution) Apitegromab selectively inhibits latent myostatin activation by targeting its diverse prodomain, ensuring high selectivity and aligning with SMA's pathobiology - Apitegromab selectively inhibits the activation of latent myostatin in skeletal muscles, where it resides and signals upon activation[51](index=51&type=chunk) - The selectivity is achieved by targeting the myostatin prodomain (**52% identical** to GDF11 prodomain), which is structurally diverse from related TGFβ family members, unlike the highly similar active myostatin (**90% identical** to GDF11)[51](index=51&type=chunk) - SMA's characteristics, such as childhood onset, significant but incomplete motor neuron loss, and atrophy of fast-twitch muscle fibers, align with apitegromab's mechanism to promote muscle growth in the presence of anabolic capacity[53](index=53&type=chunk) [Clinical Development Overview](index=22&type=section&id=Clinical%20Development%20Overview) Scholar Rock is conducting the pivotal Phase 3 SAPPHIRE trial for apitegromab in SMA, aiming for broad patient population coverage, with multiple expedited regulatory designations - The pivotal Phase 3 SAPPHIRE clinical trial is evaluating apitegromab in nonambulatory Type 2 and Type 3 SMA patients receiving SMN therapy[54](index=54&type=chunk) - Apitegromab aims to provide therapeutic benefit across the broadest range of SMA patients, including Type 1, ambulatory, and pre-symptomatic patients[55](index=55&type=chunk) - Apitegromab holds FDA Fast Track, Rare Pediatric Disease, and Orphan Drug designations, as well as EMA PRIME and Orphan Medicinal Product designations for SMA[56](index=56&type=chunk) [Phase 3 SAPPHIRE Pivotal Trial Design](index=23&type=section&id=Phase%203%20SAPPHIRE%20Pivotal%20Trial%20Design) The SAPPHIRE trial is a randomized, double-blind, placebo-controlled Phase 3 study in **156 SMA patients**, evaluating apitegromab (**10/20 mg/kg**) for **12 months** - SAPPHIRE is a randomized, double-blind, placebo-controlled Phase 3 clinical trial[58](index=58&type=chunk) - Approximately **156 nonambulatory Type 2 or Type 3 SMA patients** (aged **2-12 years**) receiving SMN therapy (nusinersen or risdiplam) will be randomized 1:1:1 to receive **10 mg/kg**, **20 mg/kg** apitegromab, or placebo IV every **4 weeks for 12 months**[58](index=58&type=chunk) - The primary efficacy endpoint is the mean change from baseline in HFMSE total score after **12 months**. An exploratory population of **48 older patients** (**13-21 years**) will also be evaluated for safety and exploratory efficacy[59](index=59&type=chunk)[60](index=60&type=chunk) [Phase 2 TOPAZ Proof-of-Concept Trial](index=23&type=section&id=Phase%202%20TOPAZ%20Proof-of-Concept%20Trial) The Phase 2 TOPAZ trial evaluated apitegromab in **58 Type 2/3 SMA patients**, assessing safety and efficacy (HFMSE, RHS) in monotherapy and combination cohorts - The Phase 2 TOPAZ trial enrolled **58 patients** with Type 2 or Type 3 SMA, with **51 patients** remaining in the **36-month extension period** as of December 31, **2022**[62](index=62&type=chunk) - The trial evaluated apitegromab as monotherapy or in conjunction with SMN therapy across distinct cohorts, assessing safety and efficacy using HFMSE and RHS scores, which are validated measures for motor function in SMA[63](index=63&type=chunk)[65](index=65&type=chunk) - The efficacy analysis is informed by SMA disease biology, apitegromab's mechanism of action, and SMN therapy effects, noting that a **3-point HFMSE improvement** is a notable divergence from the expected stable course for most patients[66](index=66&type=chunk) [TOPAZ 24-Month Analysis](index=25&type=section&id=TOPAZ%2024-Month%20Analysis) 24-month TOPAZ data showed sustained HFMSE and RULM improvements in nonambulatory Type 2/3 SMA patients on SMN therapy, with a consistent safety profile - 24-month efficacy and safety extension data from TOPAZ showed sustained and continued improvement for nonambulatory Type 2 and 3 SMA patients receiving SMN therapy[68](index=68&type=chunk) Mean Change from Baseline in HFMSE and RULM (Nonambulatory Patients) | Metric | 12-Month Data | 24-Month Data (Pooled) | 24-Month Data (Excluding Scoliosis Surgery) | | :--- | :--- | :--- | :--- | | Mean Change from Baseline in HFMSE (95% CI) | 3.6 points (1.2, 6.0) | 4.0 points (1.5, 6.5) | 4.4 points (2.0, 6.9) | | N | 32 | 29 | 28 | | Mean Change from Baseline in RULM (95% CI) | 1.3 points (0.2, 2.3) | 1.9 points (0.8, 3.0) | 2.3 points (1.2, 3.4) | | N | 31 | 33 | 30 | - Dose response was observed, with signs of further HFMSE increases as nonambulatory patients switched from low to high dose. No serious safety risks were identified, and adverse events were consistent with the patient population and SMN therapy[72](index=72&type=chunk)[74](index=74&type=chunk) [TOPAZ 12-Month Analysis](index=27&type=section&id=TOPAZ%2012-Month%20Analysis) 12-month TOPAZ data showed positive HFMSE improvements in Type 2/3 SMA patients, especially with the **20 mg/kg** dose, and a consistent safety profile - Positive 12-month top-line data from Phase 2 TOPAZ trial, which enrolled **58 patients** with Type 2 and Type 3 SMA[77](index=77&type=chunk) Cohort 3 (Type 2 SMA + Nusinersen) 12-Month HFMSE Results | Cohort 3 (Intent-to-treat population) | Apitegromab 20 mg/kg + nusinersen (n=8) | Apitegromab 2 mg/kg + nusinersen (n=9) | Apitegromab pooled (n=17) | | :--- | :--- | :--- | :--- | | Mean change from baseline in HFMSE score (95% CI) | +7.1 (+1.8, +12.5) | +5.3 (-1.5, +12.2) | +6.2 (+2.2, +10.1) | | % of patients attaining ≥1-point increase in HFMSE score | 7/8 (88%) | 7/9 (78%) | 14/17 (82%) | | % of patients attaining ≥3-point increase in HFMSE score | 5/8 (63%) | 5/9 (56%) | 10/17 (59%) | | % of patients attaining ≥5-point increase in HFMSE score | 5/8 (63%) | 5/9 (56%) | 10/17 (59%) | | % of patients attaining >10-point increase in HFMSE score | 3/8 (38%) | 3/9 (33%) | 6/17 (35%) | - Dose response was observed, with the **20 mg/kg dose** showing numerically greater HFMSE improvements and higher target engagement than the **2 mg/kg dose**. Overall safety and tolerability profile was consistent with the underlying patient population and SMN therapy, with no deaths or serious adverse reactions attributed to apitegromab[84](index=84&type=chunk)[85](index=85&type=chunk) [Phase 1 Healthy Volunteer Clinical Trial Results](index=30&type=section&id=Phase%201%20Healthy%20Volunteer%20Clinical%20Trial%20Results) Phase 1 healthy volunteer trial showed apitegromab's good tolerability up to **30 mg/kg**, a **23-33 day** half-life, and robust target engagement, confirming proof-of-mechanism - Apitegromab was well-tolerated in Phase 1 healthy volunteer trial, with no dose-limiting toxicities or treatment-related serious adverse events up to **30 mg/kg**[89](index=89&type=chunk) - Pharmacokinetic profile was consistent with monoclonal antibodies, showing dose-proportional exposure and a serum half-life of approximately **23-33 days**, supporting a Q4W dosing regimen[90](index=90&type=chunk) - Robust and sustained target engagement was observed, with marked increases in serum latent myostatin concentrations, providing initial proof-of-mechanism in humans[91](index=91&type=chunk) [Apitegromab in Other Disorders Where the Inhibition of Myostatin May Be Beneficial](index=31&type=section&id=Apitegromab%20in%20Other%20Disorders%20Where%20the%20Inhibition%20of%20Myostatin%20May%20Be%20Beneficial) Apitegromab shows potential for broader SMA types and other muscle disorders, with preclinical data suggesting benefits in metabolic diseases - Apitegromab has broad potential across SMA (Type 1, ambulatory) and other muscle disorders where fast-twitch fibers play an important role in motor function[93](index=93&type=chunk) - Preclinical experiments support the hypothesis that myostatin pathway blockade can reduce visceral fat mass and improve body composition, suggesting therapeutic opportunities for metabolic diseases like NASH, diabetes, and obesity[94](index=94&type=chunk) - The company is evaluating these additional opportunities through preclinical and translational research, clinical development, regulatory path assessments, and commercial evaluations[95](index=95&type=chunk) [SRK-181 in Cancer Immunotherapy - Inhibitor of Latent TGFβ1 Activation](index=32&type=section&id=SRK-181%20in%20Cancer%20Immunotherapy%20-%20Inhibitor%20of%20Latent%20TGF%CE%B21%20Activation) SRK-181, a selective latent TGFβ1 inhibitor, is in Phase 1 for CPI-resistant cancers, showing preclinical efficacy and a favorable safety profile - SRK-181 is a highly selective inhibitor of latent TGFβ1 activation, developed for locally advanced or metastatic solid tumors resistant to anti-PD-(L)1 therapies[96](index=96&type=chunk) - Increased TGFβ1 signaling is a key driver of immune system evasion in cancer and is associated with lack of response to PD-(L)1 blockade[97](index=97&type=chunk)[107](index=107&type=chunk) - Preclinical studies demonstrated that SRK-181-mIgG1 (murine analog) combined with anti-PD-1 antibody induced significant tumor regressions (**72%**, **57%**, **70%** in different models) and survival benefits in CPI-resistant mouse models[98](index=98&type=chunk)[109](index=109&type=chunk) - SRK-181 has shown a favorable safety profile in preclinical toxicology studies, avoiding cardiac toxicity and death observed with non-selective TGFβ inhibitors[97](index=97&type=chunk)[116](index=116&type=chunk) - The Phase 1 DRAGON clinical trial is ongoing, evaluating SRK-181 as a single agent and in combination with anti-PD-(L)1 therapy in patients with locally advanced or metastatic solid tumors, with early indications of clinical activity and good tolerability[99](index=99&type=chunk)[120](index=120&type=chunk) [Selection of a Potent and Highly Selective Inhibitor of TGFβ1 Activation](index=32&type=section&id=Selection%20of%20a%20Potent%20and%20Highly%20Selective%20Inhibitor%20of%20TGF%CE%B21%20Activation) SRK-181 is a potent, highly selective latent TGFβ1 activation inhibitor, targeting its diverse prodomain to avoid off-target effects seen with other TGFβ isoforms - SRK-181 is a highly selective inhibitor of latent TGFβ1 activation, chosen based on strong preclinical data and human translational insights[104](index=104&type=chunk) - The selectivity is achieved by targeting the prodomain of latent TGFβ1, which forms a 'cage' around the active growth factor. This prodomain is structurally diverse from TGFβ2 and TGFβ3, unlike their mature forms which share high structural similarity[103](index=103&type=chunk) - SRK-181 binds to latent TGFβ1 with high affinity and selectivity, with minimal or no binding to latent TGFβ2 or TGFβ3, and inhibits both integrin-dependent and protease-induced TGFβ1 activation[104](index=104&type=chunk)[105](index=105&type=chunk) [TGFβ1 in Cancer Therapy](index=34&type=section&id=TGF%CE%B21%20in%20Cancer%20Therapy) TGFβ1 signaling drives immune evasion and CPI resistance in cancer, with specific inhibition of TGFβ1 potentially enhancing CPI therapy effectiveness - Immune checkpoints like PD-1/PD-L1 create an immunosuppressive tumor microenvironment, leading to resistance to checkpoint inhibitor therapies[106](index=106&type=chunk)[107](index=107&type=chunk) - TGFβ signaling is associated with lack of response to PD-(L)1 blockade, especially in tumors with an immune-excluded phenotype (CD8+ T cells excluded from tumor parenchyma)[107](index=107&type=chunk) - Analysis of human tumor data shows TGFβ1 is the predominant TGFβ isoform expressed in many solid tumors, indicating specific inhibition of TGFβ1 may significantly impact cancer treatment[108](index=108&type=chunk)[109](index=109&type=chunk) [Preclinical Evidence in Overcoming Resistance to Checkpoint Inhibition](index=36&type=section&id=Preclinical%20Evidence%20in%20Overcoming%20Resistance%20to%20Checkpoint%20Inhibition) Preclinical studies showed SRK-181-mIgG1 combined with anti-PD-1 overcame CPI resistance in mouse models, inducing tumor regressions and survival benefits by modulating immune cells - Co-administration of SRK-181-mIgG1 with an anti-PD-1 antibody made CPI-resistant mouse tumor models sensitive to combination treatment[109](index=109&type=chunk) - Combination treatment resulted in significant tumor regressions (**72%** in MBT-2, **57%** in Cloudman S91, **70%** in EMT6) and survival benefits in these models[98](index=98&type=chunk)[109](index=109&type=chunk) - Mechanistic studies showed an increase in intra-tumoral effector T cells (CD8+ population expanded to **34% from 3.5%**) and a decrease in immunosuppressive myeloid cells (TAM/MDSC population reduced to **14% from 47%**)[114](index=114&type=chunk)[116](index=116&type=chunk) [Phase 1 DRAGON Clinical Trial](index=39&type=section&id=Phase%201%20DRAGON%20Clinical%20Trial) The Phase 1 DRAGON trial evaluates SRK-181's safety, PK/PD, and efficacy in CPI-resistant solid tumors, showing good tolerability and early clinical activity - DRAGON is a Phase 1, open-label, proof-of-concept trial evaluating SRK-181's safety, tolerability, PK/PD, and efficacy in patients with locally advanced or metastatic solid tumors resistant to anti-PD-(L)1 therapy[117](index=117&type=chunk) - Part A involved dose escalation (single agent and combination), while Part B is a dose expansion in five active cohorts: urothelial carcinoma, cutaneous melanoma, non-small cell lung cancer, clear cell renal cell carcinoma, and head and neck squamous cell carcinoma[118](index=118&type=chunk)[120](index=120&type=chunk) - Initial clinical data from Part A and Part B (presented in Nov **2021** and **2022**) show SRK-181 is generally well-tolerated, with early indications of clinical activity and no dose-limiting toxicities[120](index=120&type=chunk) [Potential Applications of SRK-181 in Additional Oncology Settings](index=41&type=section&id=Potential%20Applications%20of%20SRK-181%20in%20Additional%20Oncology%20Settings) SRK-181 is being explored for broader oncology applications, including immunotherapy-naïve patients, combination therapies, and myelofibrosis - SRK-181 has potential applications in other oncology settings, including immunotherapy-naïve patients, in combination with other therapies beyond checkpoint inhibitors, and in myelofibrosis[121](index=121&type=chunk) [Discovery and Preclinical Programs](index=41&type=section&id=Discovery%20and%20Preclinical%20Programs) Scholar Rock is advancing preclinical programs like LTBP-49247 (fibrosis) and HJV-35202 (anemia), leveraging its platform for highly selective monoclonal antibodies - Scholar Rock has multiple early-stage and preclinical programs targeting important disease pathways, focusing on highly selective and differentiated monoclonal antibodies[122](index=122&type=chunk) - LTBP-49247 is an anti-latent TGFβ1 antibody for fibrotic diseases, designed to selectively inhibit TGFβ1 activation within the extracellular matrix, avoiding immune cell-associated TGFβ1 and potential safety liabilities[123](index=123&type=chunk)[124](index=124&type=chunk) - HJV-35202 is a high-affinity, selective RGMc/HJV inhibitor for iron-restricted anemia, demonstrating significant suppression of hepcidin expression and iron mobilization in preclinical models[128](index=128&type=chunk)[129](index=129&type=chunk) - Additional exploration areas include modulating immune cell activation in specific immune diseases and understanding the role of skeletal muscle in metabolic physiology, with myostatin blockade showing potential to reduce visceral fat[130](index=130&type=chunk)[136](index=136&type=chunk) [License Agreements](index=44&type=section&id=License%20Agreements) Scholar Rock's license agreements include a Gilead collaboration (expired Jan 2022), a terminated Janssen agreement (rights reverted), and an ongoing Adimab collaboration for antibody discovery - Gilead Collaboration Agreement (Dec **2018** - Jan **2022**) focused on TGFβ-driven fibrosis therapeutics, providing Scholar Rock with an upfront payment of **$50 million** and an equity investment of **$30 million**, plus a **$25 million** preclinical milestone payment[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - License Agreement with Janssen Biotech (Dec **2013** - July **2022**) for selective TGFβ1 inhibition was terminated, with rights to the molecules reverting to Scholar Rock[134](index=134&type=chunk)[135](index=135&type=chunk)[138](index=138&type=chunk) - Exclusive license agreement with Children's Medical Center Corporation (CMCC) for co-owned patent rights related to platform technology was terminated in June **2022**, after a **$400,000** milestone payment for a Phase 3 clinical trial[139](index=139&type=chunk)[140](index=140&type=chunk) - Amended and Restated Collaboration Agreement with Adimab, LLC (March **2019**) for antibody discovery and optimization, under which SRK-181 was generated. Scholar Rock pays technical milestones, option exercise fees (low seven-digit or mid six-digit), and low-to-mid single-digit percentage royalties on net sales of commercialized products[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) [Intellectual Property](index=46&type=section&id=Intellectual%20Property) Commercial success depends on protecting intellectual property, including **27 pending patent families** and **18 U.S. issued patents** for product candidates and platform technology, expiring into the **2030s-2040s** - Commercial success depends on protecting intellectual property for product candidates (apitegromab, SRK-181) and the proprietary platform for generating monoclonal antibodies[144](index=144&type=chunk) - As of December 31, **2022**, the company has **27 pending patent families**, with **18 U.S. issued patents** and additional issued patents globally, covering compositions, classes of antibodies, and methods of use/manufacture[147](index=147&type=chunk) - Key patent families include platform technology (expiring **2034**), myostatin activation inhibitors (expiring **2035-2042**), TGFβ1 activation inhibitors (expiring **2037-2042**), and RGMc-selective inhibitors (expiring **2039**)[150](index=150&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - The company also relies on trade secret protection for confidential information and proprietary platform elements not publicly disclosed, using confidentiality agreements and security measures[176](index=176&type=chunk) - Two granted European patents (EP2981822 and EP3368069) are currently subject to ongoing opposition proceedings before the European Patent Office[148](index=148&type=chunk)[151](index=151&type=chunk)[161](index=161&type=chunk) [Manufacturing](index=56&type=section&id=Manufacturing) Scholar Rock outsources all clinical drug manufacturing, storage, distribution, and quality testing to third parties, continuously evaluating its strategy for commercialization - All clinical drug manufacturing, storage, distribution, and quality testing are outsourced to third-party manufacturers[177](index=177&type=chunk) - The company continually evaluates its manufacturing strategy to satisfy demand for registration trials and, if approved, commercial product launch[177](index=177&type=chunk) [Antibody Discovery](index=56&type=section&id=Antibody%20Discovery) Scholar Rock has internalized antibody discovery but may use third parties, incurring substantial milestone payments and royalties for licensed antibodies like SRK-181 - Scholar Rock has internalized antibody display and discovery capabilities but may still rely on third parties for certain antibody discovery and optimization services[178](index=178&type=chunk) - Agreements with antibody discovery vendors may require substantial milestone payments and royalties for the right to use discovered antibodies in humans or for commercial purposes[178](index=178&type=chunk) - The Adimab Agreement is an example, under which SRK-181 was generated, involving an option exercise fee and potential clinical/regulatory milestone payments (up to **mid-teen millions**) and low-to-mid single-digit percentage royalties on net sales[142](index=142&type=chunk)[143](index=143&type=chunk)[178](index=178&type=chunk) [Competition](index=56&type=section&id=Competition) Scholar Rock faces intense competition in the biotechnology industry from companies with greater resources, with success depending on product efficacy, safety, pricing, and market acceptance - The biotechnology and pharmaceutical industries are characterized by rapid technological evolution, fierce competition, and strong intellectual property defense[179](index=179&type=chunk) - Competitors include major pharmaceutical and biotechnology companies, academic institutions, governmental agencies, and research institutions, many with significantly greater financial resources and expertise[179](index=179&type=chunk)[181](index=181&type=chunk) - Key competitive factors for product candidates include efficacy, safety, convenience, pricing, market acceptance, and the availability of reimbursement from third-party payors[180](index=180&type=chunk)[183](index=183&type=chunk) [Competition for Apitegromab](index=58&type=section&id=Competition%20for%20Apitegromab) Apitegromab, a muscle-targeted SMA therapy, aims to complement existing SMN therapies, facing competition from other anti-myostatin and muscle-targeted developers - The SMA market has three approved SMN therapies, but no approved muscle-targeted treatments to date, which apitegromab aims to be[184](index=184&type=chunk) - Competition for apitegromab may come from companies developing other anti-myostatin inhibitors or muscle-targeted therapies for SMA, such as Roche, Biohaven Ltd, Biogen, NMD Pharma, and Cytokinetics, Inc[185](index=185&type=chunk) - Apitegromab is not considered competitive with existing SMN therapies (Novartis' onasemnogene abeparvovec, Roche's risdiplam, Biogen's nusinersen) as it addresses a different disease pathology and is anticipated to be used in conjunction with them[186](index=186&type=chunk) [Competition for SRK-181](index=58&type=section&id=Competition%20for%20SRK-181) SRK-181 faces competition from companies developing TGFβ pathway inhibitors for cancer immunotherapy, including Novartis, Merck, Roche, and Bristol Myers Squibb - Competitors for SRK-181 include companies developing cancer immunotherapies to be used in combination with CPI therapy, particularly those inhibiting the TGFβ signaling pathway[187](index=187&type=chunk)[188](index=188&type=chunk) - Notable competitors include Novartis (with NIS793 in Phase 3), Merck KGaA, Merck, Roche, Bristol Myers Squibb, and AbbVie Inc[187](index=187&type=chunk)[188](index=188&type=chunk) - Many competitors have significantly greater financial resources and expertise in R&D, manufacturing, clinical trials, regulatory approvals, and marketing[190](index=190&type=chunk) [Government Regulation](index=58&type=section&id=Government%20Regulation) The biopharmaceutical industry is extensively regulated by global authorities, covering all stages from R&D to marketing, with rigorous approval processes and critical compliance with healthcare laws - Government authorities in the U.S. (FDA) and other countries extensively regulate the research, development, testing, manufacturing, approval, labeling, marketing, and distribution of drug and biological products[193](index=193&type=chunk) - The U.S. approval process for biologics (like apitegromab and SRK-181) involves extensive preclinical studies (GLP), manufacturing (cGMP), IND application, IRB approval, human clinical trials (GCP, Phase 1, 2, 3), BLA submission, FDA inspections, and review[197](index=197&type=chunk) - Special designations such as Orphan Drug, Rare Pediatric Disease, Fast Track, and PRIME (EU) can offer benefits like market exclusivity, priority review vouchers, or expedited development support, but do not guarantee faster approval or success[214](index=214&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[220](index=220&type=chunk)[262](index=262&type=chunk) - Post-marketing requirements include ongoing monitoring, adverse event reporting, compliance with promotion/advertising rules, and potential REMS programs. Modifications to products or processes may require new approvals[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - Compliance with various healthcare laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Sunshine Act, GDPR) is critical, with violations potentially leading to significant civil, criminal, and administrative penalties[231](index=231&type=chunk)[235](index=235&type=chunk)[276](index=276&type=chunk) - Healthcare reform legislation (e.g., ACA, IRA) in the U.S. and foreign jurisdictions can impact drug pricing, reimbursement, and market access, potentially reducing profitability[238](index=238&type=chunk)[239](index=239&type=chunk)[242](index=242&type=chunk) [Coverage and Reimbursement](index=94&type=section&id=Coverage%20and%20Reimbursement) Commercial success depends on adequate coverage and reimbursement from government and private payors, influenced by medical necessity, efficacy, and cost-effectiveness, with evolving legislation impacting pricing - Commercial success of product candidates depends on adequate coverage and reimbursement from government (e.g., CMS, Medicare, Medicaid) and private third-party payors[291](index=291&type=chunk)[293](index=293&type=chunk) - Coverage and reimbursement decisions are based on factors such as a product's status as a covered benefit, safety, efficacy, medical necessity, cost-effectiveness, and whether it's experimental/investigational[292](index=292&type=chunk)[468](index=468&type=chunk) - No uniform policy exists in the U.S., and decisions vary significantly by payor. Obtaining coverage may require expensive pharmacoeconomic studies and providing discounts[293](index=293&type=chunk)[295](index=295&type=chunk) - Government programs like the Medicaid Drug Rebate Program and Medicare Part D impose discounts and influence pricing, with ongoing legislative efforts (e.g., IRA) aiming to control drug costs and potentially reduce reimbursement[298](index=298&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk)[303](index=303&type=chunk) [Human Capital](index=98&type=section&id=Human%20Capital) Scholar Rock prioritizes employees, fostering a collaborative culture with **114 full-time employees** (**83** in R&D) as of March 1, **2023**, despite a **25%** workforce reduction in May **2022** - As of March 1, **2023**, Scholar Rock had **114 full-time employees**, with **83** engaged in research and development and **31** in general and administrative activities, all based in the U.S[306](index=306&type=chunk) - In May **2022**, the company underwent a restructuring, reducing its workforce by **39 positions** (approximately **25%**), but has since made targeted hires to enhance capabilities, particularly in clinical development[306](index=306&type=chunk) - The company invests in employee development, offers competitive compensation (including equity), comprehensive benefits (e.g., medical, dental, mental health support), and conducts engagement surveys to foster a collaborative, diverse, and inclusive culture[307](index=307&type=chunk)[308](index=308&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk)[315](index=315&type=chunk) - Health and safety, especially in light of COVID-19, are paramount, with measures like onsite testing, mask provision, remote work support, and virtual community events[313](index=313&type=chunk)[314](index=314&type=chunk) [COVID-19 Pandemic](index=100&type=section&id=COVID-19%20Pandemic) The COVID-19 pandemic negatively impacted Scholar Rock's business, disrupting preclinical studies, clinical trials, and supply chains, with uncertain future effects - The COVID-19 pandemic has negatively impacted Scholar Rock's business, causing disruptions or restrictions in preclinical studies, clinical trial site access, and patient enrollment[316](index=316&type=chunk) - Some clinical trial participants have missed or experienced delays in receiving study drug doses and completing assessments[316](index=316&type=chunk) - While laboratory operations have resumed, challenges in procuring materials and supplies, as well as research services from vendors, persist due to supply chain issues[316](index=316&type=chunk)[317](index=317&type=chunk) - The ultimate extent of the pandemic's impact on business, financial condition, and results of operations remains uncertain[316](index=316&type=chunk) [Facilities](index=102&type=section&id=Facilities) Scholar Rock's headquarters are in Cambridge, MA, leasing new space at 301 Binney Street (lease expires Aug **2025**) and subleasing previous space - Corporate headquarters and operations are located in Cambridge, Massachusetts[318](index=318&type=chunk) - New corporate headquarters at 301 Binney Street, Cambridge, MA, with a lease expiring in August **2025** (option to extend for two years)[320](index=320&type=chunk) - Previous laboratory and office space at 620 Memorial Drive, Cambridge, MA, with a lease expiring in September **2023**, has been subleased since February **2021**[319](index=319&type=chunk) [Legal Proceedings](index=102&type=section&id=Legal%20Proceedings) Scholar Rock is not currently involved in any material legal proceedings expected to have a material adverse effect on its business - Scholar Rock is not currently a party to any material legal proceedings[321](index=321&type=chunk) - The company may be involved in various claims and legal proceedings arising in the ordinary course of business, but none are expected to have a material adverse effect[321](index=321&type=chunk) [Website Access to Reports](index=102&type=section&id=Website%20Access%20to%20Reports) Scholar Rock files annual, quarterly, and current reports with the SEC, accessible on www.sec.gov and www.scholarrock.com - Scholar Rock is subject to SEC informational requirements and files annual, quarterly, and current reports, proxy statements, and other information[322](index=322&type=chunk) - SEC filings are available on www.sec.gov and the company's website www.scholarrock.com[322](index=322&type=chunk) [Item 1A. Risk Factors](index=103&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks across product development, regulatory approval, commercialization, operations, intellectual property, and financial condition - Investing in Scholar Rock's common stock involves a high degree of risk, and investors should carefully consider all risk factors[324](index=324&type=chunk) - Key risk categories include product development, regulatory approval, commercialization, manufacturing and supply, business and operations, intellectual property, financial condition and capital requirements, and common stock[325](index=325&type=chunk) - Specific material risks include the lengthy and expensive process of product development with uncertain outcomes, potential for significant adverse events in clinical trials, reliance on third parties for clinical trials and manufacturing, and the need for substantial additional capital to fund operations[325](index=325&type=chunk)[328](index=328&type=chunk)[334](index=334&type=chunk)[358](index=358&type=chunk)[364](index=364&type=chunk) [Summary of the Material Risks Associated with Our Business](index=103&type=section&id=Summary%20of%20the%20Material%20Risks%20Associated%20with%20Our%20Business) Primary risks include uncertain product development, clinical trial failures, pandemic impacts, reliance on third parties, commercialization challenges, and capital needs - Product development is lengthy, expensive, and uncertain, with potential for delays or inability to complete development and commercialization of product candidates[325](index=325&type=chunk) - The business is materially affected by pandemics (e.g., COVID-19), impacting clinical trial data and activities[325](index=325&type=chunk) - Reliance on third parties for clinical trials and preclinical studies poses risks if they fail to meet duties or deadlines[325](index=325&type=chunk) - Challenges in building commercial infrastructure for apitegromab, manufacturing and supply chain limitations, and the need for additional capital are significant risks[325](index=325&type=chunk)[328](index=328&type=chunk)[336](index=336&type=chunk) - Intellectual property protection is difficult and costly, and failure to protect proprietary rights could harm the business[330](index=330&type=chunk)[332](index=332&type=chunk) [Risks Related to Product Development and Regulatory Approval](index=106&type=section&id=Risks%20Related%20to%20Product%20Development%20and%20Regulatory%20Approval) Product development is lengthy and uncertain, with risks of clinical trial delays, adverse events, changing interim data, and no guarantee of faster approval from regulatory designations - Product development is a lengthy, expensive, and uncertain process; clinical trials may incur additional costs, delays, or fail to demonstrate safety and efficacy[334](index=334&type=chunk)[336](index=336&type=chunk) - The COVID-19 pandemic has adversely affected business and operations, including clinical trial data and activities, leading to potential delays in enrollment and data readouts[343](index=343&type=chunk)[346](index=346&type=chunk)[347](index=347&type=chunk) - Results from preclinical studies and early-stage clinical trials may not be predictive of later-stage results, and interim data are subject to change and verification[354](index=354&type=chunk)[357](index=357&type=chunk) - Clinical trials may reveal significant adverse events or undesirable side effects, inhibiting regulatory approval or market acceptance, and patient enrollment can be difficult due to various factors, including the rarity of SMA[358](index=358&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk) - Regulatory approval processes in the U.S., EU, and other jurisdictions are lengthy and unpredictable; regulatory authorities may disagree with development plans or change approval requirements[375](index=375&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk) - Orphan Drug, Rare Pediatric Disease, Fast Track, and PRIME designations do not guarantee faster development, review, or approval, nor do they assure market exclusivity or priority review vouchers[380](index=380&type=chunk)[386](index=386&type=chunk)[388](index=388&type=chunk)[392](index=392&type=chunk)[394](index=394&type=chunk) [Risks Related to Manufacturing and Supply](index=133&type=section&id=Risks%20Related%20to%20Manufacturing%20and%20Supply) Reliance on third-party manufacturers for all supplies poses risks of limitations, interruptions, quality issues, and increased costs, exacerbated by macroeconomic events and scale-up challenges - Scholar Rock relies entirely on third-party contract manufacturers for all preclinical, clinical, and potential commercial product supplies, including drug substance, vialing, labeling, and packaging[408](index=408&type=chunk) - Risks include supply limitations or interruptions, unsatisfactory quality, and increased costs, exacerbated by macroeconomic and geopolitical events (e.g., COVID-19, Ukraine conflict, inflation)[408](index=408&type=chunk) - Failure of manufacturers to comply with cGMP or meet obligations, or the need to change manufacturers, could lead to significant delays, increased costs, and impact regulatory approval and commercialization[409](index=409&type=chunk)[412](index=412&type=chunk) - Manufacturing scale-up for later-stage clinical trials and commercial production may be challenging, potentially delaying development and regulatory approval[413](index=413&type=chunk) - Reliance on third-party antibody discovery vendors may involve substantial milestone payments and royalties, and failure to meet obligations could result in loss of rights to discovered antibodies[414](index=414&type=chunk)[415](index=415&type=chunk) [Risks Related to Our Business and Operations](index=137&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Operations) Business risks include restructuring impacts, challenges in managing growth and retaining personnel, cybersecurity threats, employee misconduct, and evolving healthcare reforms - The May **2022** workforce reduction (approximately **25%**) may not result in anticipated savings, could incur greater-than-expected costs, and disrupt business operations, potentially impacting employee morale and retention[417](index=417&type=chunk) - Future organizational growth requires hiring additional managerial, clinical, scientific, regulatory, and commercial personnel, which is challenging in a competitive market and imposes significant responsibilities on management[418](index=418&type=chunk)[419](index=419&type=chunk)[424](index=424&type=chunk) - Management transitions and loss of key personnel could disrupt strategy implementation, impede R&D objectives, and increase operating expenses[425](index=425&type=chunk) - Internal and third-party computer systems are vulnerable to cyber-attacks and security breaches, which could disrupt development programs, lead to data loss, and incur significant costs and liabilities[426](index=426&type=chunk)[428](index=428&type=chunk) - Risks of employee misconduct, noncompliance with regulatory standards, and healthcare fraud and abuse laws could lead to significant penalties, reputational harm, and operational disruptions[429](index=429&type=chunk) - Ongoing healthcare legislative and regulatory reforms could adversely affect profitability, product pricing, coverage, and reimbursement[430](index=430&type=chunk)[432](index=432&type=chunk) [Risks Related to Our Intellectual Property](index=163&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Success depends on obtaining and defending IP rights, facing risks from expensive, uncertain patenting processes, legal challenges, changes in patent law, reliance on in-licensed IP, and potential infringement claims - Commercial success depends on obtaining and maintaining patent, trademark, and trade secret protection for proprietary technologies and product candidates, and defending against third-party challenges[488](index=488&type=chunk) - The patenting process is expensive, time-consuming, and uncertain; patents may be challenged, narrowed, invalidated, or circumvented by competitors[489](index=489&type=chunk)[490](index=490&type=chunk)[493](index=493&type=chunk) - Changes in U.S. patent law (e.g., America Invents Act, Supreme Court rulings) and foreign jurisdictions (e.g., Russia's decree on 'unfriendly' countries, EU's Unitary Patent system) could diminish patent value and protection[510](index=510&type=chunk)[511](index=511&type=chunk)[512](index=512&type=chunk)[515](index=515&type=chunk)[534](index=534&type=chunk)[536](index=536&type=chunk) - Reliance on in-licensed intellectual property means failure to comply with license obligations or termination of agreements could result in loss of significant rights[499](index=499&type=chunk)[501](index=501&type=chunk)[502](index=502&type=chunk) - Third-party claims of intellectual property infringement could lead to expensive litigation, substantial damages, injunctions, or the need for costly licenses, potentially delaying or preventing product commercialization[516](index=516&type=chunk)[517](index=517&type=chunk)[519](index=519&type=chunk)[521](index=521&type=chunk) - Limited foreign intellectual property rights and inadequate patent terms (expiring from **2033-2043**) may not provide sufficient protection, allowing competitors to enter the market[498](index=498&type=chunk)[534](index=534&type=chunk)[539](index=539&type=chunk)[541](index=541&type=chunk) - Inability to protect trade secrets or claims of wrongful use of third-party confidential information could harm business and competitive position[542](index=542&type=chunk)[547](index=547&type=chunk) [Risks Related to Our Financial Condition and Capital Requirements](index=183&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Capital%20Requirements) Scholar Rock incurred a **$134.5 million** net loss in **2022** and a **$510.6 million** accumulated deficit, expecting continued losses and requiring significant additional capital beyond **2025** - Scholar Rock has incurred net losses every year since inception, with a net loss of **$134.5 million** for **2022** and an accumulated deficit of **$510.6 million** as of December 31, **2022**[551](index=551&type=chunk) - The company expects to continue incurring significant losses due to ongoing R&D, clinical trials for apitegromab and SRK-181, regulatory approvals, and commercialization activities[551](index=551&type=chunk)[552](index=552&type=chunk)[553](index=553&type=chunk) - Existing cash, cash equivalents, and marketable securities (**$315.4 million** as of Dec 31, **2022**) are expected to fund operations into **2025**, but significant additional capital will be required to complete clinical development and commercialization[554](index=554&type=chunk) - Future funding may come from equity offerings (leading to dilution), debt financings (with restrictive covenants), or collaborations (requiring relinquishment of rights)[557](index=557&type=chunk) - Changes in tax law, such as the capitalization and amortization of R&D expenses (Section 174 of the Code, effective **2022**), could adversely affect cash flow[558](index=558&type=chunk)[812](index=812&type=chunk) - Net operating loss carryforwards (**$343.0 million** federal, **$339.8 million** state as of Dec 31, **2022**) and tax credit carryforwards (**$32.6 million** federal, **$5.3 million** state) may be subject to annual limitations under Section 382 of the Code due to ownership changes, reducing their future utilization[559](index=559&type=chunk)[812](index=812&type=chunk)[814](index=814&type=chunk) [Risks Related to Our Common Stock](index=188&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) Common stock price is highly volatile, with no dividends planned; significant insider ownership, reduced reporting as an 'emerging growth company,' and potential dilution from future stock sales are key risks - The trading price of common stock is volatile, influenced by operating results, market developments, and potential litigation, with broad market and industry factors also playing a role[561](index=561&type=chunk)[562](index=562&type=chunk) - The company does not intend to pay dividends, so returns are limited to stock appreciation, and debt facilities restrict dividend payments[563](index=563&type=chunk)[564](index=564&type=chunk) - Executive officers, directors, and affiliates beneficially hold approximately **22.0%** of outstanding voting stock, allowing them to significantly influence stockholder approval matters[565](index=565&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[566](index=566&type=chunk)[571](index=571&type=chunk) - Operating as a public company incurs significant legal, accounting, and compliance expenses, requiring substantial management time[572](index=572&type=chunk) - The issuance of a substantial number of warrants (**10,459,181** outstanding as of Dec 31, **2022**) and equity awards (**7,910,306 shares** reserved) could result in significant dilution to existing stockholders[582](index=582&type=chunk) - Future sales of common stock, including through the Jefferies sales agreement, could cause significant dilution and depress the market price[583](index=583&type=chunk)[584](index=584&type=chunk) - Exclusive forum provisions in bylaws may limit stockholders' ability to choose a favorable judicial forum for disputes, potentially discouraging lawsuits[581](index=581&type=chunk) [Item 1B. Unresolved Staff Comments](index=197&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) Scholar Rock has no unresolved staff comments from the SEC - There are no unresolved staff comments[586](index=586&type=chunk) [Item 2. Properties](index=197&type=section&id=Item%202.%20Properties) Scholar Rock's headquarters are in Cambridge, MA, leasing new space at 301 Binney Street (lease expires Aug **2025**) and subleasing previous space - Corporate headquarters and operations are located in Cambridge, Massachusetts[587](index=587&type=chunk) - New corporate headquarters at 301 Binney Street, Cambridge, MA, with a lease expiring in August **2025** and an option to extend for two years[589](index=589&type=chunk) - Previous laboratory and office space at 620 Memorial Drive, Cambridge, MA, with a lease expiring in September **2023**, has been subleased since February 1, **2021**[587](index=587&type=chunk)[588](index=588&type=chunk) [Item 3. Legal Proceedings](index=199&type=section&id=Item%203.%20Legal%20Proceedings) Scholar Rock is not currently involved in any material legal proceedings expected to have a material adverse effect on its business - Scholar Rock is not currently a party to any material legal proceedings[590](index=590&type=chunk) - The company may be involved in various claims and legal proceedings in the ordinary course of business, but none are expected to have a material adverse effect[590](index=590&type=chunk) [Item 4. Mine Safety Disclosures](index=199&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Scholar Rock Holding Corporation - Mine Safety Disclosures are not applicable to the registrant[591](index=591&type=chunk) [PART II](index=200&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuers Purchases of Equity Securities](index=200&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuers%20Purchases%20of%20Equity%20Securities) Scholar Rock's common stock trades on Nasdaq ('SRRK') since May **2018**; no cash dividends are planned, with payments restricted by debt terms - Common stock is traded on the Nasdaq Global Select Market under the symbol 'SRRK' since May 24, **2018**[594](index=594&type=chunk) - As of March 2, **2023**, there were approximately **8 stockholders** of record[595](index=595&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future, intending to retain earnings for business development[596](index=596&type=chunk) - Ability to pay cash dividends is currently restricted by the terms of its debt facility[596](index=596&type=chunk) [Item 6. Reserved](index=200&type=section&id=Item%206.%20Reserved) This item is reserved and not applicable - Item 6 is reserved and not applicable[600](index=600&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=201&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Scholar Rock's financial condition, highlighting **$134.5 million** net loss in **2022**, **$510.6 million** accumulated deficit, and **$315.4 million** cash, expecting continued losses and future capital needs - Scholar Rock is a biopharmaceutical company focused on discovering and developing innovative medicines by targeting protein growth factors, with lead candidates apitegromab (SMA) and SRK-181 (cancer immunotherapy)[603](index=603&type=chunk)[604](index=604&type=chunk) - The company incurred a net loss of **$134.5 million** for the year ended December 31, **2022**, and an accumulated deficit of **$510.6 million**, expecting continued significant operating losses due to R&D activities[609](index=609&type=chunk) - Revenue increased by **76.4%** to **$33.2 million** in **2022**, primarily due to the recognition of deferred revenue upon the termination of the Gilead Collaboration Agreement's option exercise period[625](index=625&type=chunk) - Research and development expenses increased by **14.7%** to **$124.4 million** in **2022**, driven by clinical trial costs for apitegromab (Phase 3 SAPPHIRE) and increased employee compensation[626](index=626&type=chunk)[628](index=628&type=chunk) - As of December 31, **2022**, cash, cash equivalents, and marketable securities totaled **$315.4 million**, expected to fund operating expenses and capital expenditure requirements into **2025**, but additional capital will be needed for full clinical development and commercialization[632](index=632&type=chunk)[645](index=645&type=chunk) [Overview](index=201&type=section&id=Overview) Scholar Rock is a biopharmaceutical company developing innovative medicines for serious diseases, with lead candidates apitegromab (SMA) and SRK-181 (cancer), incurring significant losses and no product sales revenue - Scholar Rock is a biopharmaceutical company focused on discovering and developing innovative medicines by targeting protein growth factors, leveraging its proprietary platform for monoclonal antibodies[603](index=603&type=chunk) - Key product candidates include apitegromab for SMA (Phase 3 SAPPHIRE trial, 24-month TOPAZ data showed sustained improvement, FDA/EMA designations) and SRK-181 for CPI-resistant cancers (Phase 1 DRAGON trial)[605](index=605&type=chunk)[607](index=607&type=chunk) - The company incurred a net loss of **$134.5 million** for **2022** and has an accumulated deficit of **$510.6 million**, expecting continued significant operating losses due to R&D and other expenses[609](index=609&type=chunk) - No revenue from product sales has been generated to date, and significant expenses are anticipated for commercialization capabilities if products are approved[610](index=610&type=chunk) [Restructuring](index=205&type=section&id=Restructuring) May **2022** restructuring prioritized clinical assets, reducing workforce by **25%** (**39 positions**), incurring **$1.9 million** in severance and **$0.1 million** in equity modification expenses - In May **2022**, Scholar Rock announced a business restructuring to prioritize clinical-stage assets, resulting in a reduction of **39 positions** (approximately **25%** of the workforce)[611](index=611&type=chunk) - Restructuring costs totaled **$1.9 million** for severance benefits and **$0.1 million** in non-cash expense for equity modifications, recorded in Q2 **2022**[611](index=611&type=chunk) [COVID-19 Pandemic](index=205&type=section&id=COVID-19%20Pandemic) The COVID-19 pandemic negatively impacted Scholar Rock's business, disrupting preclinical studies, clinical trials, and supply chains, with uncertain future effects - The COVID-19 pandemic has negatively impacted Scholar Rock's business, causing disruptions or restrictions on preclinical studies, clinical trial site access, patient enrollment, and supply chain issues[612](index=612&type=chunk) - Some clinical trial participants experienced missed doses or delayed assessments. Laboratory operations have resumed, but challenges in procuring materials and services persist[612](index=612&type=chunk) - The ultimate extent of the pandemic's impact on the business, financial condition, and results of operations remains uncertain[612](index=612&type=chunk) [Financial Op

Apitegromab (Spinal Muscular Atrophy - SMA) - The global SMA treatment market is expected to reach $11.4 billion by 2028 [5] - Apitegromab is a muscle-directed approach aimed at improving motor function in SMA patients, complementing SMN-directed therapies [41] - TOPAZ trial results showed transformative potential in non-ambulatory Types 2 and 3 SMA patients [9] - In a TOPAZ analysis of non-ambulatory Types 2/3 SMA patients aged 2-12 years (n=16) receiving apitegromab at 20 mg/kg, the mean HFMSE change from baseline was +4.4 points, with 81% (13/16) experiencing ≥ 1-point increase and 56% (9/16) experiencing ≥ 3-point increase in HFMSE [68] - Approximately 90% (51/57) of patients remained on apitegromab as of December 31, 2022, in the TOPAZ trial [193] - Scholar Rock is conducting a Phase 3 SAPPHIRE study with data readout expected in 2024, and anticipates a potential launch in 2025 [23, 199] SRK-181 (Immuno-Oncology) - SRK-181 targets TGFβ-1 to overcome CPI resistance, with a potential market of 7.9-10.41 million US patients on CPI therapies [80, 77] - In the DRAGON Part A trial, at 800 mg q3w, 1 partial response (PR) was observed in a patient with anti-PD-1-resistant clear cell renal cell carcinoma (ccRCC) [100] - DRAGON Part A demonstrated the ability to escalate to high doses of SRK-181, exceeding anticipated efficacious drug exposure levels [102] Pipeline and Financials - Scholar Rock has an anticipated cash runway into 2025 [24]

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, 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 a ...

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 ...